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Axos Invest, formerly Wise Banyan, is a ‘free’ robo-advisor great for beginners, but don’t get too caught up in the word ‘free.’
There aren’t any management fees, but there are plenty of other add-on fees that decrease your profits if you aren’t careful.
Investors looking for minimal fees, investing for a specific goal, or are brand new investors do well with Axos Invest as it is a hands-off platform.
Check out my review on Axos Invest below.
What is Axos Invest?
Axos Invest is an automated investment platform that truly lives up to the name ‘invest and forget.’ They created Axos Invest with beginners in mind. It’s a platform that levels the playing field, making investing possible for anyone, even those with only a few dollars to invest.
You set your goals, fund your account and Axos Invest does the rest. Your portfolios are personalized for you – it’s not a one-size-fits-all approach. We love it for investors with specific goals. Saving for a house, a car, or for retirement? Just let Axos Invest know during setup and they’ll get you on the right path.
How does it work?
You need just $1 and your personal information to sign up for Axos Invest. Start with your email address and then answer the simple questions. All questions pertain to your personal identity (verify you are who you say you are) and your financial goals. Are you saving for a rainy day fund, to buy a car, buy a house, or retirement? These are just a few of the options.
The information you provide determines the portfolios Axos Invest creates. They base it on your time horizon, risk aversion, and money saved. They ask about your milestones (goals) and your risk tolerance. Axos uses this to create your portfolio. You can change its selections before finalizing your account, though, so you still have some control.
Deposit and withdrawal
During the sign up process, you’ll link an external bank account to your Axos Invest account. This is your ‘funding’ account. You can transfer funds to your Axos Invest account or withdraw them and transfer them to your linked account.
Withdrawals take 5 to 7 days depending on the investment you sold and its clearing time. You choose the goal to withdraw from and Axos Invest determines which securities to sell. They attempt to sell the investments with the highest tax lot to reduce your tax liabilities. After they sell the security, it takes 3 business days for it to settle and then transfer.
Axos Invest does the trading for you, but you can customize your portfolio and/or change your risk score which they assign after you answer questions, at any time. Many robo-advisors don’t allow you to change your risk tolerance, so this is a nice feature.
They will split your portfolio up into stocks and bonds, showing you the allocation based on your risk tolerance. You’ll see a pie chart with your recommended allocation, such as 40% stocks, 60% bonds (for a conservative portfolio).
What can you trade?
Axos Invest uses the modern portfolio theory (like most robo-advisors). After you answer the risk-based questions, they create a portfolio based on your goals and risk tolerance. They use a combination of ETFs to create your portfolio. Axos uses low-cost ETFs with an average expense ratio of 0.12%. The ETFs come from domestic, international, and emerging markets, including stocks, bonds, and Treasury securities. Most ETFs are Vanguard or iShares.
Here’s where things get tricky. Axos Invest claims it’s a ‘free’ robo-advisor and it is, but with many add-ons, that for the standard investor makes it not quite as free. Some add-ons are a flat fee and others are a percentage of your assets under management.
The free features include:
- Free account setup
- Free portfolio setup
- Funding your account
- Automatic rebalancing
- Portfolio management
The paid features include:
- Portfolio Plus $3/month – Get access to 30 additional ETFs, with a more focused strategy. For example, if you have an interest in block chain stocks, precious metal stocks, socially conscious stocks, or marijuana stocks, you’ll find them in Portfolio Plus among many other categories.
- Fast Money $2/month – Get your deposits working faster without a waiting period or set up automatic deposits to regularly increase your account balance with no effort. It also offers overdraft protection to avoid going over your balance before withdrawing your automatic deposits from your linked account. There may be other fees included with these features charged by the clearing company including wire transfer fees and account transfer fees.
- Tax Protection 0.24% of assets under management (max $20/month) – This package includes tax loss harvesting, elimination of specific ETFs from your portfolio, and IRA conversions (allow investors to convert a traditional IRA to Roth IRA).
**Note, if you want to open an IRA account, you must buy the Tax Protection package.
- Fund multiple goals – You may fund as many goals as you want at one time. For example, investors saving for a house and retirement at the same time may set up two goals with their own timelines, risk tolerance, and financial goals.
- Customer service – Axos Invest doesn’t have human advisor support, but you may call customer support Monday – Friday 7 AM to 5 PM PT with your questions, you just won’t receive individual financial advice.
- Cash milestone – You may set up a cash milestone, keeping a portion of your funds liquid, but it doesn’t earn interest, so keep that in mind.
- Automated financial advice – Axos doesn’t have human advisors, but its algorithms and software programs offer automated financial advice based on the information you provide.
Axos Invest Pros and Cons
How does Axos Invest work?
Axos Invest utilizes goal-based investing using the modern portfolio theory. Axos uses your timeline, amount contributed, amount already saved, and risk tolerance to create your milestone accounts. The algorithms help you reach your goals by suggesting specific contribution amounts and reallocating your investments as needed.
Is Axos Invest good for beginners?
Beginning investors need a platform with low minimum opening balance requirements and simple questions with automated rules that set up their accounts for them. Axos Invest provides all of this and more. While it’s a simplified platform (the free version), it’s a great robo advisor for beginners that have never invested or only have a little money to invest.
Is Axos Invest safe?
Axos Invest protects its investors. While no investment brokerage is without its risks (no investment is 100% fail-proof), Axos Invest is SIPC insured. Your investments are protected up to $500,000 should Axos Invest go out of business and up to $250, on cash balances.
What is an Axos Invest ‘risk score’?
After you answer Axos Invest’s initial questions, it assigns you a risk score and creates a portfolio allocation based on your answers. The score ranges from 1 – 10, with 1 being the lowest risk tolerance and 10 the highest risk tolerance – most people fall somewhere in between. Along with your tolerance, you’ll see a portfolio suggestion, such as 60% stocks, 40% bonds.
Are there other fees besides the add-on fees?
Axos Invest prides itself on its free service and many investors can use the free platform. However, all investors pay expense fees. These aren’t Axos Invest fees, but rather the management fees from the ETF sponsor. Axos keeps these fees as low as possible, choosing low-cost ETFs, but know the full cost before choosing an investment. If you want to find out more about the different hidden fees you may encounter, check out this article.
How does Axos Invest make money?
Axos Invest’s basic features are free, but beyond that, they make money on their additional packages/charges. Basic or beginning investors may start with the free options, but most investors add on features and packages as they get comfortable, which is how Axos makes money.
What are fractional shares?
Axos Invest offers fractional share investments, which is great for beginners. You don’t have to buy full shares at prices you can’t afford. Let’s say Stock XYZ’s share is $50 per share, but you only have $10 to invest. Axos Invest will purchase a fractional share prorated to the amount you can afford. Now you can invest in XYZ sooner.
Does Axos Invest automatically diversify and reallocate your portfolio?
Axos Invest offers many features including diversification and reallocation. When they create your portfolio allocation, it’s a suggestion. You may alter it as you need, but they do create a diversified portfolio that best suits your risk tolerance. They also rebalance your portfolio as necessary as time goes on and the market changes.
Axos Invest vs Betterment
If you prefer that human touch, Betterment is a better option.
Betterment doesn’t’ require a minimum investment and they charge 0.25% of assets under management. If tax loss harvesting is important to you, Betterment includes it in their basic package (not an add-on like Axos).
Axos Invest vs Ally Invest
Ally Invest is another great robo-advisors for beginners, but those leaning toward options trading benefit the most. Ally Invest offers commission-free trades and excels in its strategic tools (something Axos Invest lacks).
Ally Invest has no fees, no minimum balance, and no commissions, but you’ll pay the expense fees on ETFs, just like Axos.
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Worth It or a Scam?
Axos Invest is worth it, at least for beginners. You’ll get a free platform with no minimum balance requirements. If you want the add-ons, such as a retirement account or tax loss harvesting, the fees are minimal, but then you may look elsewhere as many robo-advisors include it in their basic packages. Axos is upfront about its additional fees, so as long as you look around, you’ll know what your account will cost.
If you want a hands-off approach and don’t want to obsess about your investments, Axos Invest makes it easy. With no minimum balance requirement and free offerings including automatic rebalancing, it’s a great robo-advisor for beginners.
If you’re a bit more advanced, Axos Invest offers a variety of packages, but compare them carefully to other robo-advisors offering the same features at lower costs (or even no cost) in some cases.
Michael is a senior writer at The Robo Investor. He earned his master’s at the Craig Newmark School of Journalism at CUNY, and is currently taking CFP courses at the University of Scranton. He has been an avid finance enthusiast ever since he started investing at the age of 23. Meet the Team