Ally Bank’s roots go back to 1919, when a New York bank expanded to Detroit and began financing auto loans for car dealerships under the name General Motors Acceptance Corporation (GMAC). In addition to auto financing for auto dealers, the business grew to include auto loans to individuals, insurance products sold to dealers and individuals, and even the financing of planes and vehicles used by the US military in World War II. GMAC Bank was established in 2000 with a focus on customer service, and it was renamed Ally Bank in 2009. Ally Bank is entirely online and has no branch offices, so it was an early entrant into online banking.
Ally’s banking and their auto and home loan programs all work in conjunction with each other, allowing balances for all accounts to be seen and the account accessed through a single platform that also includes Ally Invest, the brokerage side of Ally Bank. Ally Invest Robo Portfolios gets new customers from Ally Bank users who want all of their finances in one place. Ally Invest targets the mass affluent, which may be defined differently by different organizations, but generally fall around the areas of having at least $100,000 in household income and between $250,000 and $1 million or more in assets.
In addition to this stated target market, Ally Invest has participated in the significant increase of investing and trading accounts across the industry during the COVID-19 pandemic, and this expansion in accounts tilts towards younger investors. These customers generally have less investing experience, uncomplicated finances, and lower account balances, making Ally’s easy-to-use Robo Portfolios product an excellent fit for these customers.
This review is for Ally Invest's managed account offering. We have also reviewed the firm's self-directed brokerage, in our online broker reviews.
- Ally Invest Robo Portfolios is easy to use, has a very low $100 minimum investment, and provides an intuitive product platform targeted to newer investors and those with less complicated finances.
- The inputs for portfolio determination are generic and goal-setting is not incorporated into the robo product, so investors can’t customize the platform to meet specific financial needs or plan for large cash outlays such as college tuition and car purchases.
- Ally Invest’s Robo Portfolios is an excellent choice for existing Ally customers because they can consolidate all of their finances across Ally’s banking, lending, and investing platforms.
- The no fee pricing option is only for accounts holding 30% of the portfolio in cash. The fee for accounts with 2% cash is 0.30% per year.
Easy account setup
Open account with just $100
Socially responsible investing (SRI) is available
Investment strategy can be changed at any time
Reasonable fees, including no fees for accounts holding 30% cash
True goal planning is weak
No tax-loss harvesting
No access to investment advisors
High cash balances on no-fee accounts
|Fees||$0 for high cash portfolios with 30% cash; and 0.30% annually for portfolios that have low cash allocations|
|Goal Setting||Not incorporated into Robo Advisor, but there are tools/calculators on the Ally website for Mortgage Loans; car payments; and Repair/Renovation loans|
|Available Assets||ETFs and Mutual Funds only|
|Interest Paid on Cash Balances||0.55%|
|Customizable Portfolio||No; there are four portfolios available with a high-cash and a low-cash option for each of the four options|
|View Portfolio before Funding||Yes|
|Customer Service||Customer service is 24/7 - Phone - Online Chat for prospective and existing clients|
|Financial Advisor Available||No|
|Cash Management||Cash management is available but through a separate account at Ally, and not within the Robo Portfolios account.|
|External Account Sync/Consolidation||No|
|Mobile App||Android, iOS, Yes|
The process to open an Ally Invest Robo Portfolios account is easy, and Robo Portfolios supports individual, joint, custodial, IRA (individual retirement account), Roth IRA, and rollover IRA accounts. Anyone can take the Robo Portfolios questionnaire and receive a portfolio suggestion before taking any action for opening an account. Opening an account for current Ally customers is quick, with a simple transfer from your existing account to open the new account. The account setup process was quick for non-customers, too, although these customers need to wait for the transfer to be deposited before the portfolio is funded. Investment advisors are not available for Robo Portfolios customers, so you don’t need to speak with anyone to get going and open an account.
Ally Invest Robo Portfolios’ questionnaire is pretty vanilla, starting with four primary goals—retirement, major purchase, income generation, and wealth-building—to select from. You then work through easy-to-navigate questions to provide a time horizon for the account, your liquid assets and initial investment amount, and a risk tolerance preference. After answering these questions, you pick the portfolio type from choices of core, tax optimized, income, and socially responsible.
Your suggested portfolio is displayed based on your questionnaire responses along with information including anticipated returns, a breakdown of the different asset classes, and specific ETFs the portfolio would consist of. You can easily go back and make changes to the questionnaire responses to see different suggested portfolios until you have found the one you want. The formal account opening and funding process begins after you have chosen a portfolio to use for the account.
Goal planning on Ally Invest Robo Portfolios is weak in comparison to rivals like Wealthfront and Betterment. Goal planning using Robo Portfolios consists of simply choosing one of the four primary goals and selecting one of the available time horizons. This information is used to create the model portfolio with very little in the way of fine-tuning your goal. For example, there is no ability to set up multiple major purchases with different timelines.
Ally has clearly decided to keep things simple and this may work for their target customer base, but other robo-advisors offer more comprehensive goal planning tools that can benefit this same group of new investors. While goal planning tools are not built into Robo Portfolios, there are calculators available at Ally for home mortgage loans, car payments, and repair-renovation loans, as well as a few IRA calculators.
It is easy for investors to set up automated deposits from existing Ally accounts as well as external accounts. However, margin and borrowing against the Robo Portfolios account are not permitted. Ally does not offer checking, cash management, or the ability to trade individual stocks, ETFs, or bonds in these stand-alone robo investing accounts.
Ally offers cash management services that include bill pay, check writing, and debit cards, but these services are not integrated within the Robo Portfolios accounts. Cash services are available through a separate Ally account, but there is a good chance Robo Portfolios clients are existing customers that already have an Ally Bank account with cash services. If you want to get cash from your Robo Portfolios account, however, you would have to sell part of the portfolio and then have the cash transferred to your Ally Bank account or your outside financial institution. While the 0.55% interest rate paid on cash in Robo Portfolios accounts is competitive, the cash is not available immediately the way it is in an Ally banking account or a money market fund in a traditional investment account. Moreover, if you do cash out some of a cash-enhanced portfolio, the remainder of the portfolio will still have 30% in cash.
As outlined earlier, Ally Invest Robo Portfolios uses the questionnaire to set parameters that lead to one of the 32 different portfolios being chosen by the investor. These 32 portfolios all fall within the main four types of core, tax optimized, income, and socially responsible.
- Core is a traditional mix of stocks and bonds.
- Tax optimized includes tax-free municipal bond ETFs in the portfolio to provide some tax advantages.
- Socially responsible consists of ETFs that meet the criteria for socially responsible investments.
- Income is more conservative with a focus on dividends and near-term income rather than long-term growth.
You can change your investment goals and the criteria for the portfolio at any time. However, unlike some robo-advisor programs, Ally does not offer tax-loss harvesting as an option to help create losses to offset capital gains for the purpose of reducing taxable income.
The portfolios consist entirely of ETFs and have less than ten ETFs per portfolio. All the portfolios are designed using modern portfolio theory (MPT) to choose a mix of investments that maximizes gain while minimizing the risk of the overall portfolio. Portfolio characteristics are designed to match the questionnaire about the goal, time frame, and risk tolerance for the portfolio. Return estimates provided for each of the portfolios are not based on actual results, but are generated using Monte Carlo simulations that run multiple iterations of the portfolio for various market conditions to determine potential portfolio returns for all 32 possible portfolios. Ally uses non-proprietary ETFs for its portfolios, largely from Vanguard and iShares which both have expense ratios on the low-end of the range.
|Fixed Income||No (only through ETFs)|
|Socially Responsible or ESG Options||Yes|
True customization, beyond choosing preferences for goals, timeframes, risk tolerance, and the other criteria in the questionnaire process, is not available on Ally Invest Robo Portfolios. Your primary goals can be changed at any time, and that will result in changes to the portfolio. There is no customization beyond that.
Ally Invest Robo Portfolios are constantly monitored and rebalancing is done on an as-needed basis. Ally did not provide criteria, such as a certain percentage of the portfolio’s target allocations or a consistent frequency, but it seems the portfolios are rebalanced at least monthly. Consolidation of external accounts to get a more complete picture of your finances and tax loss harvesting are not available.
Robo Portfolios accounts at Ally are stand-alone accounts, even though they will be listed along with all other Ally accounts the customer holds. The fact that the Robo Portfolios accounts are segmented off and provide no specific dollar-based goal planning results in an overall lack when it comes to the reporting and notification side of portfolio management. There are no notifications when you risk missing your stated goals or push notifications for high fees, mismatched risk, or diversification issues with other Ally accounts.
Your Ally Invest Robo Portfolios reporting is primarily limited to account statements. You can view your account activity and key holdings of the different ETFs in the portfolio, but there isn’t any analysis beyond that.
While Ally’s desktop app and website are not dedicated to robo investing, Ally Invest Robo Portfolios are easily accessed through these platforms. You can see all Ally accounts, including robo-advisor accounts, on the login page. It is generally easy to use robo-advising features on these platforms, in part because Ally’s Robo Portfolios offering is designed for simplicity. It is easy to change the portfolio on the account and to see account performance and holdings, but, as noted previously, there are no robo account-specific alerts to encourage you to increase contributions or take other actions to reach your goal. That said, the process of answering the questionnaire and making changes to the key account variables is easy and intuitive.
There is no dedicated mobile app for Ally Invest Robo Portfolios. The account is part of the listing of account balances across Ally’s full platform. So your Robo Portfolios balance will appear alongside Ally Bank balances and self-directed Ally Invest brokerage accounts. You can select the robo account to see specific holdings and activity, but there are no specialized reports for the Robo Portfolios account. The Ally mobile app is available on both iOS and Android.
- 24/7 phone support (less than one minute hold time)
- Live chat with a human agent (existing account holders)
- No access to investment advisors
Ally provides phone support 24/7, and hold times are less than one minute. Online chat with a human is also available, but this requires logging in first. The explanations throughout the questionnaire and portfolio selection process are straightforward and easy to understand, and there is also a basic frequently asked questions section, but there is no access to investment advisors to assist with the process.
- Two-factor authentication
- Biometric login on mobile
- Securities Investors Protection Corporation (SIPC) coverage
- Excess insurance through Lloyd’s of London
- No reported data breaches
- Three outages in 2020
Ally supports two-factor authentication for all platforms and biometric login on mobile, it has a high level of encryption on its website, and carries additional insurance through Lloyd’s of London to provide account protection above SIPC coverage. While Ally Invest has not had any data breaches in the past four years, they did experience three notable outages in 2020.
Ally provides a wealth of helpful information to help educate customers, including high-quality videos, articles, calculators, and tools. The content covers a range of investment concepts and ideas. Much of the educational content is found on the Ally community page, where there is content across the Ally product lines, including auto loans, banking, and investing. The Ally Invest product line covers content like bonds, stocks, and options. This content can also be customized on the community page by the user so they see what they are interested in when pages load.
Ally also has a separate website called Ally Wise Wallet that provides customized educational content and courses to the general public. Although the information is designed with the newer investor in mind, the educational content is good and provides overviews of investing concepts that go beyond basic descriptions of account features. Although there is a lot of excellent education content at Ally, it is difficult to navigate to the content from the Ally Invest website. On the main Ally Invest website page, for example, the education link at the top of the page moves lower on the page to say they have education instead of navigating to the actual educational content page. Instead, you need to find the “Learn” section in the footer of the Alley Invest and Robo Portfolios page to navigate to the education resources.
Commissions and Fees
The main page for Robo Advisor has a prominent graphic stating that there are no fees for robo accounts, but this only applies to accounts using a cash-enhanced portfolio that keeps 30% of the portfolio in cash. Market-focused Robo Portfolios only hold 2% in cash and charge an annual fee of 0.30%. The default for Robo Portfolios is the cash-enhanced portfolio, but the platform makes it easy to switch to the market-focused system and back.
The cash-enhanced portfolio option seems to leave too much cash on the sidelines by only investing 70% in the selected portfolio of ETFs. Even though Ally pays competitive interest rates on cash in the cash-enhanced portfolios, most investors opening an investment account are doing so to invest their funds, not keep 30% on the sideline. This especially holds true for long-term investors who will likely experience significant performance drag from the uninvested cash over time. For most investors considering a Robo Portfolios account, it will make more sense to pay the competitive 0.30% annual fee for an investment account that is fully invested in the market.
Overall, the fees for Ally Invest Robo Portfolios are simple to understand. The minimum investment is only $100 and “cash-enhanced” accounts that allocate 30% of the portfolio to cash have no fees, while a market-based portfolio that allocates just 2% to cash pays 0.30% annually. The investor also pays the ETF fees in all Ally robo accounts. The ETF fees are paid for and incorporated into the account, rather than billing the customer separately. While Ally did not provide an average expense ratio for their Robo Portfolios, Vanguard and iShares ETFs both have competitively priced average expense ratios of just 0.09%, although specialty ETFs, such as for socially responsible investing, may have higher fees.
|Category||Cash-Enhanced Portfolio Fee||Market-Focused Portfolio Fee|
|Management fees for $5,000 account||$0||$1.25 weekly; or $15/year|
|Management fees for $25,000 account||$0||$6.25 weekly; or $75/year|
|Management fees for $100,000 account||$0||$25 weekly; or $300/year|
|Termination fees||$0 ($50 ACAT Transfer Out Fee for all Ally accounts)||$0 ($50 ACAT Transfer Out Fee for all Ally accounts)|
|Expense ratios||Average 0.09%||Average 0.09%|
|Mutual funds||N/A – No mutual funds||N/A – No mutual funds|
Ally Invest’s Robo Portfolios offering only requires $100 to open an account and makes it easy to get up and running with a diversified portfolio. This is a good thing for new and less sophisticated investors that want low minimums and low costs for professionally managed accounts. Although there is a no management fee option for portfolios carrying a 30% cash allocation, the likely performance drag due to the high cash allocation makes this option less attractive for long-term investing. This means Ally’s management fee of 0.30% for market-focused portfolios is the de facto cost for many investors. A fee of 0.30% is still competitive, but it puts Robo Portfolios in clear competition with other robo-advisors at or below that fee level. Some of those competitors now have no account minimums, charge lower fees, and offer better features, such as comprehensive goal planning and tax-loss harvesting.
Ally appears to be focused on converting existing customers using their other services, including lending, brokerage services, and their popular banking platform. For existing customers and others that want all of their financial services in one place, Ally Invest Robo Portfolios is a decent option. If you are not committed to Ally’s other services and not focused on having a robo-advisor that is also your bank, however, there are better options to consider among the competition.
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