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FutureAdvisor review

FutureAdvisor review: More than just for retirement

Moneywise.com / Moneywise.com

We adhere to strict standards of editorial integrity to help you make decisions with confidence. Please be aware that some (or all) products and services linked in this article are from our sponsors.

We adhere to strict standards of editorial integrity to help you make decisions with confidence. Please be aware that some (or all) products and services linked in this article are from our sponsors.

3.5

Wise Reviews™

Commissions and fees - 3

Customer service - 4

Ease of use - 4.3

Tools and resources - 4

Investment options - 3.8

Asset allocation - 4

FutureAdvisor is an easy-to-use robo-advisor that offers features such as tax loss harvesting and managed 529 accounts. However, the fees are a bit on the high side and its asset allocation isn't as flexible as that of other services.

FutureAdvisor closed in February of 2023

Check out our list of the best robo advisors to find a service that suits you best.

FutureAdvisor is an online investment advisor that automatically manages your investments. It helps you do this in an advantageous way by using modern portfolio theory (or MPT) to build and maintain a portfolio to maximize your return based on certain levels of risk indicated by your investor profile.

FutureAdvisor competes with similar online investment advisory services such as Empower, Wealthfront, and Betterment.

How does it stack up against them? It depends on what services you're looking for.

What is FutureAdvisor?

The company launched operations in March 2012. It's led by a team of finance professionals, data scientists and software engineers backed by the same venture capital team that backed PayPal and Google.

The service offers direct management of taxable investment accounts — both individual and joint. It also offers direct management of IRAs, including traditional, Roth, rollover and SEP IRAs.

With direct management, you grant the service the authority to trade in your accounts on your behalf. Since the last update, FutureAdvisor has revamped some of their services and now has new features and offerings to help you reach retirement, personal and other life goals.

How does it work?

FutureAdvisor works with Fidelity and TD Ameritrade accounts. These firms charge their usual transaction fees for trades within the account, in addition to any fees you may pay to FutureAdvisor.

Once you sign up for a FutureAdvisor account, you can get started by linking your investing accounts or manually reporting your holdings. The service will analyze everything via the dashboard and then provide you with analysis and recommendations tailored to your portfolio and specific goals.

Your recommended retirement plan will be broken down into nine simple steps. The software will then determine how well you're doing and where there's room for improvement. The recommendations will show you exactly why FutureAdvisor recommends these changes, and the updates will be made in real time.

Management includes the following services — depending upon the plan selected:

  • Index fund investing that favors low-fee index funds, primarily with Vanguard or iShares.
  • Personalized diversification through a specific portfolio based on your age, risk tolerance and investment horizon.
  • Low fees, by making portfolio fees transparent to help you pick lower fee options.
  • Rebalancing recommendations –- typically two to four times per year -– based on significant changes in your portfolio.
  • Emphasis on value and small-cap funds for greater long-term returns, includes U.S. and internationally centered funds.
  • Tax harvesting, by monitoring your holdings and looking for positions with at least $1,000 in harvestable losses at current market prices.

FutureAdvisor features

Features
Details
Minimum investment
$10,000
Fees
0.50%/year
Accounts
Taxable, Joint, Coverdell, Traditional IRA, 529, Roth IRA, Rollover IRA, SEP IRA, 401(k) Guidance
401(k) assistance
Tax loss harvesting
Portfolio rebalancing
Automatic deposits
✓ Daily, Weekly, Biweekly, Monthly, Bimonthly and Quarterly
Advice
Automated
Smart beta
𝒙
Socially responsible
𝒙
Fractional shares
𝒙
Customer service
Phone: M-F 8:30A-5P PT; Email
  • Retirement planning: A service that analyzes your funds, makes recommendations and offers tailored advice to better your portfolio and holdings.
  • Investment management: This service costs 0.50% annually and affects only the assets that you select for them to directly manage.
  • Comparison of advisors: One benefit to using FutureAdvisor's Investment Management service is that you'll get access to a chart that shows the difference of returns and fees when using FutureAdvisor versus a traditional financial advisor.
  • College savings: Advice to help you create an optimized plan for your finances and children’s future education plans. FutureAdvisor can open and manage your 529 accounts, as well as handle disbursements to the school.
  • Investing library: FutureAdvisor has an entire library of articles and educational content to help you find the answers you're looking for.

FutureAdvisor Pricing

FutureAdvisor charges a flat annual management fee of 0.5% of assets directly managed. This means that those investments and accounts that FirstAdvisor doesn't directly trade in — such as your 401(k) — are managed for free.

Highlights Empower Betterment
Rating 4.8/5 4.5/5
Minimum to open account $100,000 $10
401(k) assistance
Two-factor auth.
Advice options Automated, Human Assisted Automated, Human Assisted
Socially responsible investing
Read reviews Empower review Betterment review
More info Sign up Sign up

Portfolio

FutureAdvisor’s portfolios are comprised of varying positions in low-cost index-based ETFs. It's a balance of stocks and bonds, depending on your age and risk temperament. See their allocation chart to determine where you might fit.

Following are some of the stocks and bonds FutureAdvisor uses:

Stocks

Sector ETF Ticker
U.S. Vanguard US Total Stock Market VTI
U.S. iShares S&P 500 Index ETF IVV
Foreign iShares MSCI EAFE Value Index EFV
Real Estate Vanguard REIT Index Fund VNQ
Real Estate SPDR Dow Jones International RelEst ETF RWX

Bonds

Sector ETF Ticker
U.S. iShares Core U.S. Aggregate Bond AGG
Foreign Government iShares International Treasury Bond IGOV
Foreign Vanguard Total International Bond BNDX
Short-term U.S. Inflation-Protected Treasury Bonds iShares 0-5 Year TIPS STIP
Short-term U.S. Inflation-Protected Treasury Bonds PIMCO 1-5 Year U.S. TIPS Index STPZ

BlackRock purchase

The buyout of FutureAdvisor by BlackRock Solutions proved that this robo-advisor is here to stay. Currently, FutureAdvisor manages over $950 million in assets and will continue to serve both existing and new individual investors from its home base in San Francisco.

So why is BlackRock interested in FutureAdvisor? They plan to sell the company's automated advisory services to other banks, securities firms and insurance companies that are customers of BlackRock.

This new company sells a system that allows financial institutions to place trades and assess how those trades will affect their portfolios’ risk profiles, among other features. This makes the buyout with FutureAdvisor a good match for both companies.

Summary

If you're looking for a service to maintain your brokerage account, FutureAdvisor might be a great choice for you. It's great for set-it-and-forget-it investors.

However, note that the fees can quickly add up, when you compound your annual FutureAdvisor fee with the fees that the brokerage service you use for each trade will charge.

Have you used FutureAdvisor? If so, do you recommend it?

About our author

Kevin Mercadante
Kevin Mercadante, Freelance Contributor

Kevin Mercadante is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry. He lives in Atlanta with his wife and two teenage kids.

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