Founded by storied financial firm, John Hancock, in 2014, Twine provides savings plans and algorithmic investment services through its San Francisco and Boston offices. New clients deposit funds into individual taxable accounts, with a $5 minimum requirement for savings and a $100 minimum requirement for automated investing. Twine’s major draw is the simplicity of the user experience. Twine keeps you focused on achieving your stated goal and avoids distracting you with the details of how the robo-advisor is actually working to support you.
Cash earns interest
Backed by John Hancock
No ETF or mutual fund listings
No Android app
No tax-loss harvesting
Starting up an account with Twine is quick and easy. You simply enter an e-mail address and password to access the account pages, setting up recurring deposits for a cash savings or investment account. You pick your investment goals from a laundry list or choose custom goals. Each goal generates a conservative, moderate, or aggressive portfolio after you answer questions on asset levels, risk tolerance, holding periods and other personal data.
You can also choose a partner for shared goals, generating a combined account interface that hypothetically combines partner funds into a single account. However, this is solely a front-end process because each partner maintains an individual brokerage account in reality. This means that each person keeps their access to the funds they deposit and the proportional returns on that capital.
While the setup process is simple, you cannot see what type of assets are within the portfolio until you actually fund an account. This causes Twine's rating for account setup to drop significantly as we feel that this is a lack of transparency.
Twine takes a goal-specific approach to its platform, but it doesn’t offer much in the way of guidance, calculators or tools. You can review transactions and relative performance statistics on your account management pages. Twine offers recommendations about funding levels based on progress toward time targets, but there are few goal-setting tools other than generic questions at the time of set-up. The forward-testing methodology that measures goal progress utilizes historical returns between 0.7% and 6.0%. This relative lack of goal-setting support is compounded by the fact that you cannot speak directly with a human advisor.
Funding your account requires logging into the account management interface and setting up mandatory recurring deposits from a linked bank account. Withdrawals can be requested with a few clicks on the account interface, but the receipt of funds takes seven to ten business days, which is slower than the industry average. Individual account holders cannot use margin or borrow from the account, and the platform offers no banking services.
Twine currently pays 1.05% on overnight cash swept into FDIC-approved instruments. The platform does state that it is meant to achieve a specific financial goal, not help you with a comprehensive financial plan, so the service offerings reflect that. At first glance, it looks like you cannot open retirement, college savings, or other tax-advantaged accounts, but the ADV brochure states that your account will be registered as an IRA if you choose retirement as your goal. However, there is no ability to transfer an existing account to Twine, which is a major omission.
Twine’s algorithms, like most robo-advisors, follow Modern Portfolio Theory (MPT) rules for creating and populating your portfolio. The system generates a conservative, moderate, or aggressive portfolio in response to your profile data. Exposure is taken solely through ETFs and mutual funds, with no individual stocks, direct fixed-income products, or socially conscious companies. Progress toward your goals generates system recommendations on funding levels, whether for an individual or partnership, and profile adjustments may also change the categorization of your portfolio.
Portfolios offer tiered return projections based on “unusually good,” “most likely” and “unusually bad” performance; the amount that clients want to invest; and how much they will contribute each month. Each portfolio also shifts allocations in response to the chosen holding period and time left to achieve the stated goal.
For example, an aggressive portfolio with a time horizon up to five years allocates 70% or more to money market and bond ETFs, with stock ETFs comprising the other 30%. A time horizon greater than five years lifts the stock allocation to 80%, with the remainder in money market and bond funds. Rebalancing on your portfolio is triggered by deposits, withdrawals, or returns that are used to maintain the target allocations for the portfolio during that time period.
Unfortunately, we were unable to find documentation about the ETF or mutual fund pools used to build portfolios. This marks a major omission because ETF-related expenses are not covered in the program fee, forcing you to incur these hidden costs. It’s also hard to tell if John Hancock and Twine benefit financially from their undisclosed investment pool, raising a potential conflict of interest.
Twine doesn’t offer a lot of information or detail on what is going on behind the scenes in your management account. The account management interface shows you standard performance metrics that detail up-to-date portfolio performance broken down by goal. Various account views display current market value, earnings, a graph highlighting potential future returns, and deposit funding levels.
Twine doesn’t perform regularly scheduled rebalancing. Instead, rebalancing occurs in reaction to withdrawals or deposits, changing asset levels, and time left to goal realization. Rebalances seek to reduce investments in over-allocated asset classes while increasing investments in under-allocated asset classes. You cannot request rebalancing nor make changes to ETFs or mutual funds picked for portfolios. Twine also lacks the tax-loss harvesting that many of its competitors offer.
Twine offers an easy-to-read, mobile-ready website and iOS mobile app that features enhanced account management features. There’s no Android mobile app, which will be a problem for many users given Android's worldwide market share. The iOS app provides biometric and two-factor authentication.
The website contains a handful of links that highlight major account features, explain services, and disclose legal requirements. You hit a paywall/funding barrier quickly when beginning the account set-up process, denying a much-needed look at the quality of the questionnaire and system-generated portfolio allocations. There are no planning tools or calculators, and most of the vital information is buried within the FAQ pages.
Like many seemingly important details, the contact information is hidden in the FAQs. The support link leads you to a Twine Support Center applet, with a simple entry form but no address, phone number, e-mail, or live chat links. Other FAQ pages include a phone number and e-mail address, but all “contact us” links open to the form entry page. Additional review identified customer service hours between 9 a.m. and 5 p.m., Monday through Friday. Multiple calls placed to the toll-free number produced prompt contact with a customer service representative. The company’s address was found within the advisory fine print and nowhere else.
Education & Security
It is worth noting again that Twine doesn’t brand itself as a diverse platform to manage your financial life. It wants to be your solution for saving and investing for defined goals with set timelines. This narrow focus naturally limits how much Twine puts into its resources. The website features a generic blog with 29 articles under four headings, but the content is primarily focused on user success stories and there’s no search function to get quick information on needed topics. The most useful materials were up to date, although broad-brush tutorials lacked the quantitative tools needed to assist short-term goal planning and long-term financial planning.
Commissions & Fees
Twine’s pricing can be a bit deceptive, advising that you pay “25-cents per month for every $500 in the account,” which translates into a relatively high 0.60% per year. Marketing materials tout “no hidden fees,” but the fine print states that ETF fees and some commissions are not covered under the advisory program. In addition, Apex charges for wire transfers and transferring your account to another broker. The business model suggests that Apex gets payment for order flow when processing Twine transactions, but there’s no disclosure on who retains that capital.
Is Twine a Good Fit For You?
Twine could be a perfect fit for young investors looking to save money for a specific goal. You can easily open an account and fund it regularly, while trusting the algorithms with the rebalancing and asset allocation shift as the target date approaches. Of course, this simplicity will be attractive to more than just young investors. Despite the relatively high fee in a very fee competitive space, Twine may be carving out a niche where it competes more with bank savings accounts than wealth management providers. Moreover, Twine’s connection with John Hancock will no doubt comfort many conservative investors who may otherwise never consider allowing a robo-advisor to manage their money.
That said, more experienced or curious investors will be turned off by the lack of detailed information. Better disclosures on account management could help reduce this frustration, and that may come with time. Even with more robust information and resources, however, Twine still needs to do a much better job eliminating client roadblocks. The lack of an Android app is a serious oversight, as is the lack of tax-loss harvesting when we are talking about longer-term savings and investing in taxable accounts. Until these issues are resolved, you may find better saving and automated investment options among Twine’s competitors.
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