Ally Managed Portfolios were originally launched in 2014 by TradeKing, prior to its 2016 acquisition by Charlotte-based Ally Financial Inc. Its current incarnation provides digital asset management services through wholly-owned Ally Invest Advisors, an SEC-registered investment advisor. The high-tech service, based upon Modern Portfolio Theory (MPT) principles, is fully digital, following the footprint of other Ally products. Clients cannot consult directly with a financial advisor, though they have access to 24/7 customer support.
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.
New and Notable Updates
- Ally Invest offers two styles of managed portfolios. Cash Enhanced portfolios hold 30% cash and earn interest, while Market Focused portfolios average 2% cash and carry a 0.30% management fee.
- Customers can get help quickly via Twitter (@allycare) and Facebook Messenger.
- Ally's Cash-Enhanced portfolios are free of fees, though they hold 30% cash.
- Market Focused portfolios have approximately 1% cash and charge a fee of 0.30% of assets under management.
- Each account is assigned to a single goal, such as retirement or asset-building, but you can have multiple accounts.
Ally Invest Managed Portfolios offers two styles of automated investing accounts. The standard account, labeled Market Focused, carries a very small cash allocation, and charges a 0.30% fee for assets under management. The firm added portfolios that hold 30% cash in September 2019, called Cash Enhanced, with a zero management fee aimed at those just getting started with investing, with the goal of making new investors more comfortable. Portfolios are populated with fractional shares of low-cost ETFs.
"What we are doing at Ally is removing barriers so everyone has access to the opportunity to build wealth," says Ally Invest president Lule Demissie. "Once the client feels comfortable, they have the choice to upgrade from those free services to others for a fee."
Ally Invest Managed Portfolios allows you to open individual taxable, joint taxable, traditional IRA, Roth IRA, and custodial accounts, as well as rollovers from qualified employment plans.
Competitive advisory fee.
Top-tier financial institution.
24/7 telephone and live support.
No way to contact a financial advisor.
Weak goal-planning resources.
No tax-loss harvesting.
Most education resources are outside the managed portfolios.
The account setup for Ally Invest Managed Portfolios is easy and intuitive. A simple and anonymous questionnaire asks you to select an investment goal from a set of icons that are labeled Retirement, Major Purchase, Generate Income, or Build Wealth. Then you provide an estimate of your current liquid assets, and a dollar amount for your goal.
Next, you select an investment horizon and risk tolerance rated on a five-point scale between “very low” and “very high.” Household assets and contribution levels are added on the next page, while the final page presents a choice between taxable and retirement accounts. This section includes a checkbox to “tax optimize” the taxable account with municipal bonds, which are bought through fractional ETF shares. You can also choose at this point a socially responsible portfolio, which is also built from ETFs.
Your profile is then used to generate a recommendation for one of five standard model portfolios: Conservative, Moderate, Moderate Growth, Growth, and Aggressive Growth. Each proposal includes an ETF listing that shows the security classes in the portfolio and the percentage allocation for each holding. The breakdown also provides a link to a detailed historical performance that’s often missing at rival robo-advisors. You can redo the questions or adjust your answers to evaluate different portfolio mixes. These portfolios default to the high-cash fee-free selections, though at this point you can opt for a portfolio with a smaller cash allocation (1.1% as of July 2020) after opening your account. You can see the suggested portfolio prior to entering any sensitive personal data.
A $100 minimum deposit is required to begin investing, which can be established as individual taxable, joint taxable, traditional IRA, Roth IRA, custodial, or a rollover from a qualified employer plan. You cannot open a SEP Keough or 401(k) account.
When first setting up your account, you're asked to define goals based on a group of icons labeled Retirement, Major Purchase, Income Generation, and Wealth Building. If you choose Retirement as a goal, you can open an IRA, Roth IRA, or a taxable account, but there are few tools to help you figure out how much you need to set aside. You can only set a single goal per account, though you could in theory open multiple managed portfolio accounts. The Income Generation account is relatively unique for robo-advisory services.
Ally Invest Managed Portfolios provides adequate goal tracking but few planning tools. An online tracker shows progress towards your goal and odds of achieving it within the investment horizon. The system alerts you whenever the portfolio risks missing the goal, prompting a recommendation for a one-time infusion of cash or setting up a recurring deposit. Goal-planning resources are sparse and hard to find, with few calculators, tools or “how-to” articles. There are resources on other parts of the site, but they are not integrated into the Ally Invest Managed Portfolios platform. The issue of limited planning tools within the platform is compounded by your inability to get in touch with a financial advisor.
From the main screen, you can also make deposits, set up recurring deposits (monthly only, unless you select weekly deposits during initial setup), and initiate withdrawals. Managed Portfolios do not allow you to borrow against your balance.
Portfolios with high cash balances are paying 1.0% on cash as of 9/1/2020, though the rate is variable and may change after the account is opened. The other portfolio types, which include the Socially Responsible option, carry 2% cash. Third-party investment accounts are not taken into consideration when building portfolio recommendations.
Most of the cash management features offered by Ally Invest come from its parent, Ally Bank. You can open separate checking accounts that include debit cards and bill paying services. There are no cash management capabilities built directly into the Managed Portfolios feature.
Ally Invest Managed Portfolios populates your portfolio with fractional shares of low-cost ETFs. The underlying holdings of these ETFs include domestic and foreign fixed income, equity securities, and cash. As Ally Invest Managed Portfolios doesn’t use proprietary funds, the ETFs are cultivated from well-known low-cost providers including Vanguard and iShares. The regular managed portfolios hold 1% in cash to provide a “buffer” but you do not earn interest. Cash-enhanced portfolios hold 30% cash and earn 1% interest.
Ally Invest Managed Portfolios follows classic MPT in creating and managing your portfolio. According to the firm's disclosures, the investment strategies are diversified across a broad mix of asset classes, geographies, major market sectors, and segments. The platform evaluates portfolios daily and automatically rebalances your portfolio to reduce deviation from intended allocations whenever it is required, but there is no regular schedule for this.
Ally Invest Managed Portfolios provides no tax-loss harvesting. You can choose a socially responsible portfolio that consists of ETFs with high ratings from MSCI. Right now, you can minimize some of the tax burden through municipal bond funds.
Ally Invest Managed Portfolios’ account interface features a graph with projected long-term returns under various market conditions. You can drill down to asset classes and individual holdings while icons display Center for Financial Research & Analysis (CFRA) ETF reports. The platform also provides a detailed accounting of transactions, gains, losses, and fees including dividends and earned interest.
Ally Invest Managed Portfolios has its own mobile app that focuses on this program, so it supports fewer banking functions than the full-featured iOS, Android, and Windows mobile apps that connect the wide range of Ally financial products. It does, however, include all of the features you'd find on the desktop web experience. The iOS app supports the voice-activated Ally Assist, while all operating systems provide for two-factor authentication.
Managed Portfolios is part of the massive Ally website, so finding the program can take a few clicks because it comprises just one of many financial products. It's often featured on the Ally Bank home page, or you can click on Invest and then choose Managed Portfolios to jump right in. The workflow is simple and each step is clearly explained.
Customer service is available to you by telephone, live chat and email 24 hours per day, seven days per week. Contact attempts produced a variety of waiting times, averaging a slow, but adequate, one minute and 53 seconds to speak with a representative who was knowledgeable about program details. The online FAQ has been expanded. Clients can also contact customer support on Twitter and through Facebook Messenger.
Education & Security
There isn't a lot of educational content built directly into the digital advisory, but as a Managed Portfolios customer, you share educational resources with self-directed clients through the Invest portal, which offers a wide selection of generalized articles and videos in a blog format. Most of the goal-planning content is focused on retirement planning. Ally Invest has added articles and videos to its education portal in 2020, and plans to continue to update the offerings as market conditions change.
In 2020, Ally Invest launched quarterly day-long live-streaming digital conferences, offering free educational sessions hosted by Ally Invest President Lule Demissie and Chief Investment Strategist Lindsey Bell. These conferences offer sessions for investors of all skill levels. Full recordings of the sessions presented so far, on March 11, 2020 and June 24, 2020, can be found on Ally Invest's YouTube channel, which includes hundreds of other educational videos.
The site uses 256-bit SSL encryption while mobile apps support two-factor authentication. The wholly-owned Ally Invest Securities LLC holds client funds, providing access to Securities Investor Protection Corporation (SIPC) insurance while Apex Clearing provides excess SIPC insurance up to $37.5 million through Lloyd’s of London.
Commissions & Fees
You may choose one of the high cash allocation portfolios, which are offered free of management fees. If you opt for a portfolio with less cash in it, Ally Invest Managed Portfolios charges a competitive 0.30% advisory fee for assets under management, paid quarterly. The contents of your portfolio carry low ETF expense ratios that average between 0.06% and 0.09%. There are no transaction, service, or termination fees, but Apex Clearing charges for all sorts of paperwork, including wire transfers and account transfers to other broker-dealers.
- Monthly cost to manage a $5,000 portfolio: $0 or $1.25
- Monthly cost to manage a $25,000 portfolio: $0 or $6.25
- Monthly cost to manage a $100,000 portfolio: $0 or $25.00
Ally's wrap fee disclosure statement is available on its website by clicking here.
Is Ally Invest Managed Portfolios a Good Fit For You?
Ally Invest Managed Portfolios offers an excellent fit for current Ally customers who can benefit from the automated management of their portfolio. The easy onboarding process, efficient goal-tracking resources, and the price will please new customers as well, making Managed Portfolios a strong alternative to higher-cost services. While the program is marketed primarily to the millennial generation, older customers may also find good value, especially if they’ve booked inferior returns through self-directed investment. The income-generating portfolio should be of interest to those near or in retirement.
Ally Invest Managed Portfolios is a true robo-advisor in the sense that it helps you create a portfolio of non-proprietary funds and then manages it for you. You pay the fee if you have chosen a low-cash allocation, and the company finds low-cost funds that balance risk and diversification according to industry best practices. There are some missing features, such as tax-loss harvesting, but the competitive pricing is below that of more feature-rich offerings. Equally as important, the low account minimum makes it even more accessible for young investors.
It is a sign of how far the robo-advisory industry has come when we consider something like Ally Invest Managed Portfolios as a value offering for individual investors – it gets the job done but isn’t too fancy about it. This type of technology was not available for an initial investment of $100 and a fee of 0.30% just a few years ago.
Investopedia Robo-Advisor Rating Methodology
Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of robo-advisors. Our 2020 reviews are the result of in-depth evaluations of over 20 robo-advisor platforms, including the user experience, goal-setting capabilities, portfolio construction, costs and fees, security, mobile experience, and customer service. You can read our full robo-advisor rating methodology for a much more in-depth explanation than the summary below.
Overall Star Rating Explained
With the individual investor in mind, we took a critical look at the services and technology provided by robo-advisors. We organized our methodology into nine categories, scoring each advisor across multiple variables to rate performance in every applicable category. The score for the overall award is a weighted average of the categories.
|Education & Security||5%||6|
The Review Process
To evaluate these platforms, we sent questionnaires with over 100 queries to the participating robo-advisories. Most of the companies we reviewed gave us socially-distanced video demonstrations of their platforms and services during August 2020.
From the questionnaires, the hands-on testing of the platforms, and the platform demonstrations, we scored each category and then combined the category scores into an overall rating for each robo-advisor. Each category covers the critical elements users need to thoroughly evaluate a robo-advisor.