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Interactive Advisors – Best Robo for Experienced Investors? | Review 2021

Interactive Advisors

6.4

Fees

4.0/10

Account minimum

6.0/10

Ease of use

7.0/10

Beginners

5.0/10

Advanced users

10.0/10

Pros

  • Great portfolio choice and customization
  • Change your portfolio anytime you want
  • Excellent human advice
  • Hands-off investing
  • Perfect for the advanced

Cons

  • High fees
  • High minimum requirements
Disclosure: Please note that this article may contain affiliate links

If you’re looking for easy, transparent, and low-cost investments, Interactive Advisors claims they have it all.

With a large selection of portfolios created by professional portfolio managers and fees ranging from 0.08 to 1.5 percent of assets under management, there’s something for everyone here, according to IA.

If you’re an existing IBKR client, it’s a no-brainer to partition some of your assets into automated investing taking the pressure off yourself. Don’t worry, you still have a say in what you invest in, it’s just a more laid back experience.

If you aren’t already an IBKR client, Interactive Advisors is best for the experienced investor looking for a little bit of a hands-off approach to investing that can meet the minimum requirements and can afford the fees.

Keep reading to learn my thoughts in this Interactive Advisors review.

What is Interactive Advisors?

Interactive Advisors has a different model than your standard robo-advisor. Rather than setting goals and letting the robo-advisor pick your assets, you invest in a portfolio. You can choose from rules-based portfolios to diversified and asset allocation models.

How does it work?

There are automated portfolios managed by the algorithms and automatically rebalanced and portfolios run by money managers (humans), which cost more. You decide what you want out of your portfolio and they manage the rest.

In addition, clients can upgrade to an Interactive Brokers Universal Account at any time. This account allows you to trade your own assets including stocks, bonds, options, and ETFs at low commission rates.

Experienced Investors
Account Minimum
$1,000
Management Fee
The fees vary between 0.08% to 1.50% depending on the level of advice you choose.
Portfolio
A lot of different options. Anything from automated, diversified or actively managed. Again, this depends on how much you are willing to spend.
Rebalancing
Tax Loss Harvesting
Fractional Shares
Smart Beta
Automatic Deposits
SRI
401(k) Assistance
Human Advice
Best for
Sophisticated investors who don´t mind the high fees and are looking to invest in actively managed portfolios.
Account Types
Individual, Joint, Trust and IRA
Summary
Interactive Advisors offers a wide variety of active and passive portfolios for experienced investors.
Review
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Current Promotion
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Experienced Investors
Account Minimum
$1,000
Management Fee
The fees vary between 0.08% to 1.50% depending on the level of advice you choose.
Portfolio
A lot of different options. Anything from automated, diversified or actively managed. Again, this depends on how much you are willing to spend.
Rebalancing
Tax Loss Harvesting
Fractional Shares
Smart Beta
Automatic Deposits
SRI
401(k) Assistance
Human Advice
Best for
Sophisticated investors who don´t mind the high fees and are looking to invest in actively managed portfolios.
Account Types
Individual, Joint, Trust and IRA
Summary
Interactive Advisors offers a wide variety of active and passive portfolios for experienced investors.
Review
-
Current Promotion
-

Account opening

Like most robo-advisors, you’ll answer questions when you sign up for Interactive Advisors. The questions help IA create your diversified portfolio maximizing profits and limiting your costs based on your goals and risk tolerance. But, it’s not the same as the traditional model. You choose the portfolio manager you want to follow/mimic and your money is invested accordingly.

All you need is $100 to open an account for an automatically managed portfolio, of which there are 50 or more portfolios to choose from. If you prefer a more advanced portfolio managed by a money manager, the account minimums vary at much higher amounts, with the average around $5,000 but go all the way over $100,000.

Deposit and withdrawal

Interactive Advisors offers several ways to deposit and withdraw funds including incoming and outgoing wires, ACH transfers, and mailed in checks.

Please note, you must inform Interactive Advisors when you initiate a deposit or withdrawal so they can watch for the funds and/or honor the request. You’ll see how to do this on your dashboard.

Interface

Interactive Advisors is available on web browsers and mobile devices. It works best with large screens, though as they push out a lot of information at one time, which means a lot of scrolling if you’re on a small screen or a mobile phone.

Trading options

You can open any type of account at Interactive Advisors including individual and joint accounts. They have taxable and retirement accounts, but they don’t have SEP accounts. All accounts are ‘cash accounts’ which means you can use your proceeds of a settled sale immediately to invest in another portfolio rather than waiting the typical 2 days.

Choosing your Portfolios

This is the most important part of IA. You mimic portfolio managers’ investments, but IA limits what portfolios you have access to by using your initial questionnaire. Your risk score from the questionnaire must be higher or equal to the portfolio you’re choosing in order to be eligible. You must also meet the minimum investment amount and have margin permission should you need to purchase securities on margin.

What can you trade?

Interactive Advisors has some of the largest selections of assets/portfolios including:

  • Industry leaders
  • Undervalued companies
  • Growth companies
  • Global companies
  • Social justice
  • Socially responsible *Check out OpenInvest if you are interested in SRI.
  • Technology
  • Healthcare
  • Small or large-cap companies

Costs

Interactive Advisors’ costs work a little differently than other robo-advisors, as they have several tiers. On average the fees range from 0.08% – 1.5% per year depending on the chosen portfolio. They charge the fees monthly but don’t charge fees on un-invested cash. As far as fees go, there are certainly cheaper options out there.

Additional features

  • Cash account – You can have a cash account at Interactive Advisors, but they pay very little interest, if any on your balance
  • Human advisors – Once you sign up for an Interactive Advisors’ account, you have access to unlimited help from their advisors over the phone
  • Customer service – If you have general account questions or need help, you can contact customer service 9 AM – 6 PM ET Monday-Friday
  • Education – Interactive Advisors has plenty of articles and videos on their website for educational purposes, but some of the data is outdated.

Interactive Advisors Pros and Cons

PROs
You mimic an experienced portfolio manager’s assets. - You don’t have to think about what you want to invest in – you just have to choose a portfolio and IA does the rest for you. It’s different than a traditional robo-advisor that gives you a selection of a handful of pre-built portfolios. This gives you more opportunities.
CONs
Portfolios often close to new investors – Once a portfolio reaches its limit, it closes. You can contact IA and let them know you are interested in the portfolio, but while it’s closed you cannot join.
You can stop certain stocks from being traded – If there are certain stocks you don’t want to be included in a portfolio, you may enter them in your ‘stock exclusions section’ and your portfolio manager will not purchase those stocks.
Many portfolios have high minimum balance requirements – You may not qualify to invest in many of the portfolios if you don’t have a large amount to invest.
You can change your risk score – If your financial status changes or you have different risk factors, you may retake the original questionnaire to get a different risk score, which may open up other portfolios.
Interactive Advisors doesn’t focus on goals – Instead, you focus on portfolios and manage your goals yourself. Any rebalancing they do is because your account drifted from the target portfolio.
The dashboard is transparent – You can see your account activity at all times and even use the IA tools to predict your fees and manage your account.
It’s hard to tell what your fees are – You typically don’t know the full amount of your fees until you make the trades.
There are a large number of portfolios available. – You can choose from portfolios with a wide range of investment options and in various markets.
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PROs
You mimic an experienced portfolio manager’s assets. - You don’t have to think about what you want to invest in – you just have to choose a portfolio and IA does the rest for you. It’s different than a traditional robo-advisor that gives you a selection of a handful of pre-built portfolios. This gives you more opportunities.
You can stop certain stocks from being traded – If there are certain stocks you don’t want to be included in a portfolio, you may enter them in your ‘stock exclusions section’ and your portfolio manager will not purchase those stocks.
You can change your risk score – If your financial status changes or you have different risk factors, you may retake the original questionnaire to get a different risk score, which may open up other portfolios.
The dashboard is transparent – You can see your account activity at all times and even use the IA tools to predict your fees and manage your account.
There are a large number of portfolios available. – You can choose from portfolios with a wide range of investment options and in various markets.
CONs
Portfolios often close to new investors – Once a portfolio reaches its limit, it closes. You can contact IA and let them know you are interested in the portfolio, but while it’s closed you cannot join.
Many portfolios have high minimum balance requirements – You may not qualify to invest in many of the portfolios if you don’t have a large amount to invest.
Interactive Advisors doesn’t focus on goals – Instead, you focus on portfolios and manage your goals yourself. Any rebalancing they do is because your account drifted from the target portfolio.
It’s hard to tell what your fees are – You typically don’t know the full amount of your fees until you make the trades.
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FAQ

Can I invest in multiple portfolios?

Yes, you can invest in as many portfolios as you want, as long as you have the funds. Your Interactive Advisors dashboard will show each portfolio individually as well as an aggregate of all your accounts. Investing in multiple portfolios is nice if you have multiple goals you want to fund and want to keep the funds separate.

Will my portfolio exactly mimic the portfolio managers’ fund?

In some cases, there may be some performance drift. This happens most commonly when you exclude certain stocks from your portfolio that the portfolio manager included. It can also happen if you have a cash flow issue that directs your portfolio the wrong way.

Can I see the available portfolios and their details?

To an extent, you can see the available portfolios before you fund your account. You’ll see a high-level overview of what it entails, but you can’t see actual details until you fund your account and are choosing your portfolio. If that makes you doubt if to invest with Interactive Advisors, take this quiz to see if a different robo could serve you better.

How many stocks does a portfolio contain?

On average, a portfolio has up to 300 different stocks in it because Interactive Advisors invests in fractional shares, giving you a much greater chance at diversification. You can also choose from a large variety of ETFs from Vanguard, Wisdom Tree, and State Street.

Does Interactive Advisors use Modern Portfolio Theory?

Unlike traditional robo-advisors, Interactive Advisors does not use Modern Portfolio Theory. Instead, they follow the portfolio manager’s investments. You can choose actively or passively managed portfolios, but overall, you have the final say eliminating certain stocks from your portfolio or pulling back on aggressive investments when you get closer to your goals timeline.

Can you borrow from your portfolio?

Yes, Interactive Advisors offers both margin lending and loans you can borrow against your portfolio. They offer low-interest rates on both accounts. However, to take advantage of either option, you must have an Interactive Brokers account (separate from IA).

How often are portfolios rebalanced?

The rebalancing frequency depends on the portfolio manager and type chosen. Accounts managed by portfolio managers are rebalanced on an as-needed basis. Other accounts are rebalanced either quarterly or monthly. You can see before you invest how often accounts are rebalanced.

How does Interactive Advisors make money?

Interactive Advisors makes money on the management fees they charge as well as trading commissions on individual assets.

Alternatives

Interactive Advisors vs M1 Finance

M1 Finance works differently than Interactive Advisors. This broker offers commission-free trades that you create in pies rather than choosing prebuilt portfolios. You can choose prebuilt pies, similar to the prebuilt portfolios IA offers or you can build your own.

Like IA, you can invest in fractional shares and you may borrow against your balance. Like IA, you’re in charge of choosing your assets, and M1 manages the portfolio for you. As far as cost goes, though, M1 wins as there’s no management fee or commissions in most cases. If you’re cost-conscious, but are an advanced investor, M1 may be a good choice.

Interactive Advisors vs Betterment

logo of bettermentBetterment is generally for beginning investors, but if you have least $100,000 to invest, the Betterment Premium account offers many benefits. Betterment is a more hands-off investment platform, unlike Interactive Advisors.

You can invest in fractional shares, and your portfolio is determined for you based on answers to their initial questions that determine your risk profile and goals. With Betterment Premium, you get unlimited access to certified financial planners, which is nice for investors that want that bit of reassurance that they’re doing things right.

Current Promotions

There are currently no promotions.

Worth It or a Scam?

Interactive Advisors is completely different than most robo-advisors out there. It’s worth it if you’re an experienced investor that wants to mimic experienced portfolio managers. You basically mirror everything they do, which is a great way to catch on to different ways of investing. The fees are high, but if you want the experience, it may be worth it.

The fact that IA recently brought their minimum opening balance down from $5,000 to $1,000, it’s much more attainable for many investors, including those that want to try their hand at investing for themselves with still a bit of handholding.

Summary

Is Interactive Advisors right for you? Think about what you want. If you’re looking for a robo-advisor that handles everything for you including picking your portfolio, IA isn’t the one.

If, on the other hand, you love the freedom of choosing portfolios, excluding certain assets, and making changes with the reassurance of professional help, IA may be the right choice for you.

Robo Chooser

Use the following Quiz and find out which robo advisor is best for you.

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