Launched in 2015, Stash is an all-digital offering for financial services aimed squarely at younger investors to help them spend, save, and invest wisely. It has a user-friendly interface and is more geared towards saving and spending than investing. It offers what are called Stock-Back® rewards that allow you to earn shares of stock or ETFs when you make purchases with a Stash debit card1.
Debit account with "Stock-Back"
Excellent educational resources
Automatic savings and investment tools
No tax-loss harvesting
No automatic rebalancing
Debit account doesn't earn interest
Stash offers debit accounts1 through Green Dot Bank and digital advisory services are offered through Stash Investments LLC. Apex Clearing Corporation provides clearing and execution services and serves as a custodian for advisory assets of Stash Clients. Stash has introduced a tiered account structure. For the Beginner tier, investors pay $1 per month for a taxable investment account. It includes a personal investment account, debit account access, and the ability to earn Stock-Back®, along with free financial education. A Growth account, for $3 per month, offers everything in the Beginner tier plus tax benefits for retirement investing. A Stash+ account, for $9 per month, also adds investing accounts for two children (Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) accounts), as well as a debit card and a monthly market insights report.
Some of the exchange-traded funds (ETFs) have fees that are on the higher end—although this reflects how targeted some of them are in terms of thematic selection. Stash’s ETF universe includes offerings focused on companies involved in emerging technologies like blockchain and digital security, gaming, robotics, and social media in addition to regional focuses, socially responsible options, and more traditional themes.
Stash is very much designed with the beginner investor in mind. You need to create a Stash account and then the Stash Coach app guides you through the onboarding process, asking a series of questions that collect your personal details along with a choice between conservative, moderate, and aggressive risk tolerance. Life status, net worth, and other income data complete your profile. As part of account setup, you create a taxable investment account before setting up a debit account through Green Dot Bank.
Prior to account setup, you can play with some broad tools, but these are mostly in the form of measuring the impact of increased funding on a portfolio assumed to grow 5% a year. That said, you can still view the investment offerings through Stash in detail prior to giving over your email. Stash goes the extra step of gathering together useful links and information on a secondary landing page for each listed offering.
As part of your account setup, you pick one of six specific themes that include “Emerging international up and comers” and “Companies with a conscience,” although marketing materials don’t tell you that mandatory thematic filtering may limit investment choices. You can reject Stash’s “curated suitable investment” list and choose limited alternatives but the system may respond with reasons the alternatives might be inferior to the proposed list—whether socially-responsible, thematic, or traditional. Portfolio recommendations may change after funding if you edit the answers used to create your profile.
Stash supports individual, retirement, and custodial accounts but there’s no information or disclosures on joint accounts so it’s assumed they are not supported. The account minimum is $0 but the $1 per month (individual) and $3 per month (retirement through a Growth account) minimum payments will result in very high fees in relative terms until the account balance is high enough to bring that under industry averages. For those who want to open an IRA account only, it's $2 per month with no cash management services.
Stash’s goal setting and tracking tools are geared towards young investors just getting started. The Stash Coach app directs you to a wide assortment of broad-brush educational and “how-to” articles through the Stash Learn portal while the account interface includes rudimentary analysis tools that include “Potential” and “Idea” sections. Beyond the digital resources and tools, you are on your own after setup, as Stash doesn’t offer the ability to talk to a financial advisor.
This lack of a human advisor is covered well by the digital helper in the form of Stash Coach. Stash Coach is organized as a game where you earn points and attain higher levels after completing investment and learning challenges. Gamifying investment will likely appeal to young investors, but older clients may not like the interface - especially when looking for quick advice.
The content through Stash Coach is tailored to your client profile, meaning that you see different articles and get different tasks if you are conservative in nature as opposed to aggressive or moderate. The weekly challenges are meant to expand your investment knowledge and awareness of the range of funds that Stash offers. There are also tasks that relate to your account funding, rewarding you for turning on Auto-Stash or going for a number of months without selling investments. This could be construed as benefiting Stash as much as you, but the end result is more funds going into your portfolio and staying there.
Stash also provides banking services that can work with investments through Stock-Back®. The Stash debit account includes thousands of free ATMs2 and no hidden or overdraft fees3. However, there’s no overnight sweep and it pays no interest, unlike cash in the investment account. Instead, your purchases earn “Stock-Back®” rewards that automatically add fractional shares of the retailer or retailer’s parent if the company is publicly traded and on Stash’s list of over 450 stocks and ETFs. Rewards from your other purchases buy fractional shares of Vanguard Total World Stock ETF, which carries a low 0.09% expense ratio4.
You can fund your debit account via direct deposit, free cash in the investment account, or through a transfer from a linked bank account. You can also fund the account by depositing the cash at participating retailers, but they can charge up to $4.95 per transaction and funding is capped at $2,500 per day.
Documentation about the debit card program and its features is confusing because early access was first offered by invitation only and outdated information is persistent throughout the website, even though the new account was opened to all clients several months ago. The fine print also states that not all clients will be accepted into the program but reasons for refusal aren’t well disclosed.
Deposits to your investment account require logging in and making a request that’s sent to a linked bank or setting up recurring deposits on a weekly, biweekly, or monthly basis. Withdrawals are requested through the same interface but it takes up to five business days to receive funds. Stash accounts do not use margin and they offer no banking services beyond the debit card at this point.
According to disclosures, Stash’s investment advice is primarily based on the following principles:
- Equities as an asset class
- Passive investing
- Fixed-income assets hedge portfolios
- Investment advice adjusted for emotional bias and personal beliefs
Overall, the investment methodology disclosures are limited to broad-brush commentary in the fine print, making it tough to tell if the Stash robo-advisor is executing a robust strategy.
Stash’s robo-advisor picks your portfolio contents from a pool of 190 S&P 500 components and 58 exchange traded funds. The ETF list has been relabeled with socially-conscious and other thematic titles, like “All That Glitters” for a precious metals fund and “Water The World” for a water resources fund. The thematic titles are friendlier for new investors and certainly make it easier to understand what the fund is about if it is your first time seeing sector level ETFs.
Unfortunately, many of the listed ETFs carry high expense ratios that aren’t well disclosed, potentially incurring hidden costs that will confuse investors if you haven’t gone through the provided links to check the key stats. Also, the thematic labels carry over to the listing of your portfolio holdings through account interface rather than the actual underlying securities or tickers. This is usually a moot point with robo-advisors, as investors looking for a robo-advisor to take on the responsibility of handling their investments don’t often feel the need to double-check the algorithm’s diversification and allocation strategy, but it becomes an issue with Stash that we’ll address as part of portfolio management.
Stash basically leaves portfolio management up to you. According to Stash, they use a “proprietary process to help generate the Recommendations made available to each Client through the Platform.” The Investment page states that they curate a list of well-known stocks and investing themes based on expense ratio, trading liquidity, and risk profile. Stash states that it doesn’t rebalance portfolios “or otherwise manage Stash Accounts for Clients on a discretionary basis.” Instead, they “provide non-discretionary investment advisory services,” leaving portfolio management in the hands of the client. In other words, Stash Coach is going to recommend investments for you and flag potential issues about diversification, but you will ultimately be responsible for addressing the issues (or not).
The younger client base Stash is after may not understand this front-end approach, instead, expecting the robo-advisor to keep a watchful eye on their investment positions. Weak methodology disclosures don’t help, potentially causing clients who are losing money to wonder why one security was chosen and another wasn’t. In addition, Stash’s performance information is limited to historical data on individual securities, making it impossible to compare the resiliency of Stash’s approach with rivals who disclose sophisticated and detailed methodologies. In the absence of all this, Stash is putting a lot of expectations on the beginner investor to learn quickly while at the same time asking them to trust a process that isn’t disclosed to a level an experienced investor would be comfortable with.
Finally, dividend reinvestment is mandatory for retirement accounts and is available for individual taxable accounts. Stash has a program called DRIP, where customers can automatically reinvest dividends across STASH's suite of investment products, including personal brokerage, traditional & Roth IRA's and custodial accounts.
The website contains a handful of links that highlight major account features, explain services, and disclose legal requirements. Many features are geared toward young investors, with references to social media and the “budding legal marijuana industry.” Stash admits that 84% of their clients are beginners and the website addresses their needs with a simplified approach to financial planning and communications.
However, legal disclosures are exactly the opposite—with long-winded, poorly-written, and purposely dense text forcing the majority of new and prospective clients without law degrees to fall asleep or give up. For example, reading the advisory agreement requires slogging through 40 pages of small print, with over 19,000 words and no table of contents. Some of the additional compensation through order flow, for example, lurks in this long slog.
The website is mobile-ready and Stash provides mature iOS and Android apps that have garnered good reviews and provide the option of two-factor authentication. Stash was, of course, originally launched through a mobile-only platform and has grown to offer web-based account management. One drawback from this is that the desktop experience is not as full-featured as the mobile app. Some features, such as debit card use, are available on the mobile app only.
Stash provides you prompt customer service for the most part. The contact link triggers a drop-down menu with an entry form that searches the available FAQs for potential answers. Beyond that, an email address and phone number are provided at the bottom of most web pages and in the FAQ. Customer service hours are not listed on the website, but in direct queries to the company we are told that the hours are Monday through Friday from 8:30AM to 6:30PM and Saturday and Sunday from 11:00AM to 5:00PM Eastern time. Several phone calls during market hours achieved contact with a representative within two minutes. However, there’s no live chat and the FAQ omits key information, including a description of the management interface and the advice—or lack thereof—received after account setup.
Education & Security
Stash offers its educational materials for free through the Stash Learn section. The Stash Learn section is impressive, with dozens of articles divided into logical investment and planning topics that include retirement, vacation, parenting, career, and income. This section also features numerous podcasts as well as tutorials on using the Stash platform, with many how-to articles that are also accessible through the FAQ. All of the content reviewed was well-written in plain language – a plus for the beginner demographic. The premium investment account comes with additional marketing commentary and content beyond what is offered in the lower tier accounts.
Stash’s security is sufficient and comparable with peers. Stash uses 256-bit SSL encryption and follows industry standards for data security and access control. Apex Clearing holds your funds, providing access to Securities Investor Protection Corporation (SIPC) insurance and excess insurance.
Commissions & Fees
Stash used to charge a flat 0.25% wrap fee annually for advisory services, with a $1 minimum per month for taxable accounts and $2 for retirement accounts. This changed in August 2019 to a tiered structure with $1 a month for a taxable account (Beginner), $3 per month for a retirement account (Growth) and $9 a month for all that plus Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) accounts. All of these accounts (except retirement only) come with the aforementioned debit account service as part of them. Apex may also charge fees to transfer the account to another broker and to send wire transfers.
There are some important points to keep in mind to understand Stash’s fee structure. You aren’t charged add-on trading fees, but you will incur management fees charged by ETFs after purchase. As mentioned, the ETF list includes many securities with high expense ratios, so this is a layer of fees outside of Stash’s direct service that you should keep in mind. More importantly, a fee of $1- $3 per month is actually much larger percentage-wise on small accounts than the assets under management wrap fee approach at other robo-advisories. For example, $12 annually on a $1000 is 1.2%. If you look at that number in comparison with a service that offers tax-loss harvesting and automatic rebalancing for 0.5% annually ($5), you see that the smaller account minimum comes at a cost for beginners. With $5000 in a Beginner account, Stash is a competitive 0.24% annually in accordance with less automated portfolio management tools.
Is Stash a Good Fit For You?
Stash's simplified approach to getting new investors started with an app that lets you track spending and saving, while giving you access to buy stocks with rewards points is unique and effective. Its educational content is useful and appropriate for new to moderately experienced investors. Stash makes money through a competitive 0.25% management fee while touting no hidden costs but the affiliated Stash Capital broker-dealer benefits from client order flow, securities lending, directing transfers from debit to investment accounts, and FDIC-insured overnight cash sweeps. These hidden fees come directly from client pockets, building mistrust that can be overcome with a few tweaks in company policy and full disclosures that can be understood by the average client.
Stash can be a great solution for many investor types. See how they compare against other robo-advisors we reviewed.
1The Monthly Wrap Fee starts at $1.00 and you’ll also bear the standard fees and expenses reflected in the pricing of the ETFs in your account, plus fees for various ancillary services charged by Stash. For current fee schedule.
2Other fees may apply. Fee-free ATM access applies to in-network ATMs only. For out-of-network ATMs and bank tellers a $2.50 fee will apply, plus any additional fee that the owner or bank may charge. In order for a user to be eligible for a Stash debit account, they must also have opened a taxable brokerage account on Stash. Account opening of the debit account is subject to Green Dot Bank approval.
Investment products and services are not offered by Green Dot Bank and are Not FDIC Insured, Not Bank Guaranteed, and May Lose Value. Debit Account Services provided by Green Dot Bank and Stash Visa Debit card issued by Green Dot Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc. Visa is a registered trademark of Visa International Service Association.
3Other fees apply to the debit account.
4Stash Stock-BackⓇ rewards is not sponsored or endorsed by Green Dot Bank, Green Dot Corporation, Visa U.S.A., or any of their respective affiliates, and none of the foregoing has any responsibility to fulfill any stock rewards earned through this program.
Opt-in is required. In order to earn stock in the program, the Stash debit card must be used to make a qualifying purchase. Stock-BackⓇ Rewards that are issued to a participating customer's personal brokerage account via the Stash Stock-BackⓇ Program, are not FDIC Insured, Not Bank Guaranteed and May Lose Value.
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