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Have you always wanted a second opinion on your investments? Don’t we all, right? It’s hard to know when what you’re doing is right.
FutureAdvisor gives you that second opinion with a free analysis and/or investment management, depending on the program you choose.
You can get away with the free analysis and get free recommendations based on your goals and risk tolerance, using the same modern portfolio theory used by a majority of robo-advisors.
If you’re a DIY investor, you can take the information and do it yourself. If not, FutureAdvisor has a paid version, which I’ll cover in this review.
What is FutureAdvisor?
I’d like to say FutureAdvisor is a robo-advisor, and it is, but with a unique aspect. Not too many robo-advisors offer free services let alone a full analysis of your existing investments and that’s what FutureAdvisor offers. Right there, it’s worth its weight in gold – who wouldn’t want a second opinion on such a big part of their life?
They have a premium offering too, which as the name suggests isn’t free, but most robo-advisors aren’t free. In fact, when we refer to a free robo-advisor, it usually means that there is no management fee. There is a separate article for such “free” robos, you can find it here.
FutureAdvisor’s management tool oversees your investment accounts, including automatic rebalancing and tax loss harvesting. If that’s not enough, you also get access to financial advisors – something most robo-advisors don’t offer.
Here’s the catch –
They only work with accounts at TD Ameritrade or Fidelity. If you don’t have an account with either one yet, you’ll need one.
FutureAdvisor is great for DIY investors, those who want a hands-off approach but the ability to talk to someone, and of course current TD Ameritrade and Fidelity investors.
To use FutureAdvisor, you must give them management rights to your account at either broker. This means they can execute trades on your behalf. If you don’t have an account there yet, FutureAdvisor can help you transfer your assets over, but you may incur more charges.
How does it work?
Like most robo-advisors, setting up a FutureAdvisor account is simple. You answer questions so the advisor can determine your risk tolerance and goals. Since they use the Modern Portfolio Theory, they use these two factors to choose the right investments. With the answers, they’ll determine the right asset allocation to meet your goals.
You need a minimum of $5,000 to start, and can transfer over assets from other brokers to meet the minimum, but you may incur charges. Please note that you have little control of your assets once FutureAdvisor takes over.
If you have certain stocks you already own that you don’t want sold, you can put them on a ‘do not sell’ list, but only if they make up a small fraction of your portfolio.
When you set up your account, you’ll choose one of three options:
- Are you saving for retirement?
- Are you investing to save for a major purchase?
- Are you looking for general investments?
The answer to this question plus your risk tolerance and amount invested helps them determine your asset allocation.
Investors may open both individual and joint accounts both taxable and retirement. In addition, you may open 529 college savings plans. You may also rollover old retirement accounts.
Deposit and withdrawal
Depositing money in your FutureAdvisor account is easy. Just link your external checking account to make transfers. FutureAdvisor doesn’t have automatic deposit capabilities, though. You must manually transfer any funds.
Withdrawals are just as simple. Using the same interface, you request your withdrawal; however, it may take up to 4 business days to complete.
FutureAdvisor works on both desktop and mobile devices. The website itself is rather limited, since most of what they do is behind the scenes in your TD Ameritrade or Fidelity account.
Your trading options are somewhat limited to what’s offered at TD Ameritrade or Fidelity. You can open individual or joint accounts, though, which many robo-advisors don’t offer. As far as retirement accounts, you can open a traditional, Roth, rollover, or even self-employed IRA. The only retirement account they don’t oversee is the 401K.
What can you trade?
FutureAdvisor manages ETFs from up to 12 asset classes. They aren’t very transparent about the number of ETFs they have to choose from, but upon the latest findings, it looks like they have 14 ETFs to choose from, which don’t include socially responsible investments.
As I said above, the portfolio analysis is free. DIY investors can take the recommendations and create/manage their own portfolios. This doesn’t cost anything.
If you sign up for the premium account, you pay 0.50 percent of assets under management, plus the expense ratios which are an average of 0.14 percent to 0.18 percent.
- Cash Account
FutureAdvisors doesn’t have a cash account, but they also don’t have asset accounts. They manage your investments at TD Ameritrade or Fidelity, both of which have cash accounts. If you have cash drag, you may earn interest on the money that sits idle while you decide how to invest it.
- Human advisors
Premium clients have access to a team of financial advisors. While you may not get the same advisor every time you call, your team works on your behalf and is always on the same page. You’ll get the same answer no matter which advisor you talk to on your team of advisors.
- Customer service
Customer service is rather lacking with FutureAdvisor, unfortunately. You don’t have a phone or live chat option. Instead, you may send a message and wait for a response. They also offer their FAQ where you may find answers to your questions if they’ve already been asked. If you pay for the premium service, though, you have access to the financial advisors, which may help you out further.
- Research and education
Since FutureAdvisor is a management service and not the investment broker itself, they don’t offer research and education, however, you can get the services from TD Ameritrade or Fidelity, both of which offer robust research and educational opportunities.
FutureAdvisors Pros and Cons
Is FutureAdvisors right for beginning investors?
FutureAdvisors is unique in its offerings. It’s only for existing TD Ameritrade or Fidelity clients. It’s an add-on service that helps manage your accounts, giving you that robo-advisor feeling without using a robo-advisor. In most aspects, FutureAdvisors is best for experienced investors, especially if you don’t want to pay the additional 0.5 percent of assets under management on top of the fees you pay TD or Fidelity. Find our guide on beginner-friendly Robo-Advisors here. DIY investors are experienced investors that can handle the work and stress involved in managing your own account.
How does the second opinion work?
If you just want the second opinion, get the free analysis of your existing portfolio. You’ll receive a report of suggested portfolio options. You can compare it to what you have now and make decisions based on what FutureAdvisors offers. If you don’t agree, you don’t have to make any changes, but since FutureAdvisors has nothing to gain with your free analysis, it’s fair to believe that they have your best interests in mind and may be offering a legitimate way to improve your portfolio.
Should you move your investments to TD Ameritrade or Fidelity?
If you want to try FutureAdvisors services, you must have an account at TD or Fidelity. That doesn’t mean everyone should shift their assets over to them, though. Make sure it makes financial sense to do so. You’ll likely incur tax liabilities and possibly penalties if you aren’t’ careful. Consult with your tax advisor before switching over.
Why are FutureAdvisors fees so high?
FutureAdvisors fees are higher than most robo-advisors and it’s in addition to the other investment fees you may incur. While they try to stick to commission-free trades, we all know that’s not 100 percent possible all the time. This means you may incur more fees, adding to the 0.5 percent fee.
Should only DIY investors use FutureAdvisors?
FutureAdvisors is great for DIY investors because it’s like reassurance that you’re doing something right or that you need to make changes. That doesn’t mean only DIY investors should use it. If you’re looking for free advice, yes, only DIY investors should use it. But, if you have a TD or Fidelity account and want that second opinion, it may be worth it to get more advice on your account.
Is FutureAdvisor better than paying for a human advisor?
If you compare the cost of a human advisor and a robo-advisor like FutureAdvisor, you’ll see the tremendous savings. While you don’t work with an advisor one-on-one, but rather have a team of advisors, you still get the same great advice and keep more of your earnings in your pocket. You must be comfortable with digital management of your portfolio as most of FutureAdvisor’s management is electronic.
How does FutureAdvisor get access to your accounts?
It seems crazy to let another company handle your investments at TD Ameritrade or Fidelity, but it’s possible. You just need to grant management permission. This gives FutureAdvisor the ability to make trades on your behalf and adjust your portfolio. You can cancel this option at any time, though.
How does FutureAdvisor make money?
FutureAdvisor makes money on the premium account holders. They charge the fee quarterly. While it seems like they would lose money on self-managed accounts, the premium accounts make up for the ‘free’ services they offer.
Future Advisor vs Personal Capital
Like FutureAdvisors, Personal Capital gives you access to a team of advisors, but their minimum required investment is a lot higher. You need $100,000 invested with PC in order to use them and they charge between 0.49 percent and 0.89 percent.
Only investors with at least $200,000 invested get access to two dedicated financial advisors. But, if you meet the minimum investment requirement and want a balance between a robo-advisor and human advisor, Personal Capital offers the best of both worlds.
Future Advisor vs SigFig
SigFig has a much lower account balance requirement of $2,000 and they even offer free management services on your first $10,000 invested. You get unlimited meetings with a financial advisor and pay just 0.25 percent of assets under management.
SigFig is best for hands-off investors that want automatic rebalancing rather than handling the investments themselves at a cost that’s a fraction of a human advisor.
Future Advisor vs Wealthfront
Wealthfront is one of the most well-known and most affordable robo-advisors. They charge just 0.25 percent of assets under management and ensure all investments are tax optimized. They automatically rebalance your portfolio and offer a 529 college savings plan too. Wealthfront, like FutureAdvisors offers free advisory services even if you don’t open an account. Wealthfront is great for beginning investors.
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Worth It or a Scam?
Is FutureAdvisor worth it? If you’re an experienced investor looking for a second opinion, yes for sure. If you are a beginner or you already use a robo-advisor that manages your account, there’s no need or use for it. You have to have an account with Fidelity or TD Ameritrade, so for those clients, yes FutureAdvisor could be the best option that helps you stay on track.
The bottom line is FutureAdvisors is great for anyone that wants a free analysis. Who would turn down a free analysis, right? If you could hear that you’re doing things right or that you need to change things, you’d want to know. Anyone can use those services, no matter where you have an account.
Now, if you want FutureAdvisor to manage your investments for you, that’s when you need a brokerage account at either Fidelity or TD Ameritrade. If you’re a DIY investor that can handle doing it yourself, though, take advantage of the free analysis and make the tweaks they suggest so you can get your account on track.
If the above doesn’t apply to you, check out our quiz to see which may be the right fit for you.
If you have any questions, please comment below.
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