June 16, 2018

Ally Robo Portfolio Review

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Ally Robo Portfolio offers automated investing with no advisory fees. But what's the catch? Read on to find out how it compares to other top robo-advisors.

5-point scale (the higher, the better)

Pros and Cons

  • No advisory fees for Robo Portfolio
  • Good customer service
  • Preview your strategy before signing up
  • No tax loss harvesting
  • Large cash buffer

Bottom Line

Solid robo-advisor with great customer service if you have $100 to start

How Robo Portfolios Work

Ally Robo Portfolio has no annual advisory fee. The minimum to open an account is only $100.

Based on your goals and risk profile, Ally will create the best portfolio for you. Each portfolio is comprised of about 9 ETFs from 5 different asset classes.

  • US Stocks
  • International Stocks
  • US Bonds
  • International Bonds
  • Cash

Your portfolio will be made up of 30% cash . This cash is set aside and earns the same interest as Ally Online Savings. It's meant to act as a buffer to balance out potential risk should market conditions change. As your investments grows, Ally will continue to rebalance your portfolio so it always remains at 30% cash.

You will not be able to access this cash like a traditional savings account.

Who Is It Best For?

Ally Invest Robo Portfolios would benefit anyone who wants professional investment guidance without the hefty advisor fees. Those who benefit the most include:

  • Beginning investors who don't understand how to invest
  • Investors who are too busy to manage their portfolios
  • Current Ally Bank or Ally Invest customers

Robo Portfolio offers options for many types of investors. Whether you want to open a taxable account, IRA, or a custodial account, Ally has you covered. This opens up the possibilities for investors of any magnitude, whether saving for a short-term goal or retirement.

Is Ally Invest Safe? Your investments with Ally Invest Robo Portfolio have the security of SIPC coverage. This covers your investments of up to $500,000 should Ally Invest go out of business. It doesn't protect you against bad investment decisions or investments that plummet.

They also provide supplemental insurance through Lloyd's of London for investors who have more than $500,000 invested with Ally Invest. This coverage is also strictly if Ally goes out of business and your investments are lost.

What Are the Fees?

Robo Portfolios charges no advisory fees for your assets under management.

This includes:

  • No annual charges
  • No trading fees
  • No transfer or transaction fees
  • No rebalancing fees

Sounds too good to be true? The catch is that 30% of your portfolio will be in cash. This is how Ally earns money and can provide Robo Portfolio free of advisory fees.

Note that ETFs have a fee called an expense ratio. This is the only fee you'll pay. This is the operating cost of the fund, which Ally Invest has no control over nor profit from. These fees are automatically deducted from the funds' assets. Ally portfolios have an average expensive ratio of 0.09%, which is relatively low.

Portfolio Options

You have 4 portfolios to choose from:

Diversified across domestic, international and fixed-income assets. You can choose your risk level - from conservative to aggressive.

Designed to generate investment income through dividends. It's more conservative so it's ideal if you are currently near or in retirement.

Tax optimized:
Designed to maximize your earnings if you make after-tax contributions to an IRA. It's best for investors in higher tax brackets.

Socially responsible:
Only invests in businesses that actively practice sustainability, energy efficiency, or other environmentally-friendly initiatives.

Getting Started

Getting started takes just a few minutes. You answer 5 basic questions that help Ally determine your risk level. They then create an investment strategy for you. If you choose to accept it, you open up an account and fund it with a linked checking or savings account.

Ally Robo Portfolio's software then monitors your investments and rebalances them as things change. It's totally hands-off for you. You don't have to worry about trading and managing your own portfolio.

Ally Robo Portfolio offers these account options:,

  • Individual and Joint Taxable
  • Traditional and Roth IRAs
  • Rollover IRA
  • Custodial

The Platform and App

Ally Robo Portfolio' platform is basic. It's certainly not a standout point for this robo-advisor. The same is true for their mobile app, mostly because they don't have one specifically for automated portfolios.

Ally has an app that is a central app for all Ally services. This makes it easy to log into one place and see how all of your accounts with any Ally service are performing at any given time. Download it on the App Store or Google Play.

Reasons We Like Ally Invest

  • Good customer service. Sometimes it's hard to find good customer service with a robo-advisor. Some companies live up to the "robo" part of the name and only offer support online. Ally Robo Portfolio takes it a step further by offering phone and online chat support to help you when you need it.

  • Seamlessly integration for Ally Bank customers. For existing Ally Bank customers, you have one dashboard for everything. You can log into one account and view all of your investments and deposit accounts in one place.

    Transferring funds is also easy and instant. You don't have to wait the typical waiting period for funds to be available either to invest or after withdrawing.

  • Customize your portfolio. While Robo Portfolio does recommend a specific portfolio based on your risk tolerance, you can customize it. You are free to play with the allocations until you find the right balance between risk and return to help you reach your goals.

  • Automatic rebalancing. The market changes often, and your portfolio could get knocked off target with those changes. When that happens, Ally automatically rebalances your allocations to get you back on track to meeting your goals.

  • Completely hands-off. If investing overwhelms you or you don't have the time to manage your portfolios, Ally Robo Portfolio does the work for you. Once you set your portfolio, you sit back and let them do the work while you watch your portfolio grow.

  • Diversified portfolio. With 9 ETFs in 5 asset classes to choose from, you can diversify your risk and lower your chances of loss. Without all of your eggs in one basket, you lower the risk of experiencing a total loss when one sector of the economy suffers.

  • Preview before signing up. You answer Ally's basic questionnaire and let them put a portfolio together before you enter any personal information. This gives you a chance to decide if Ally is right for you before ever signing up.

Reasons You May Want to Look Elsewhere

  • No tax loss harvesting. Tax loss harvesting helps minimize your tax liability while offsetting your capital gains with losses. This isn't a service that Ally offers, but one that several other robo-advisors do offer. If taxes are of a concern to you, Ally may not be the right option.

  • Large cash buffer. The 30% cash allocation is high. While you do earn interest on it, you may not get as good of a return as investing. Some people may not want this extra cash sitting around uninvested.

  • No human advisors. There is no access to human advisors if you need more personalized advice or customization.

How It Compares

Ally Invest vs Betterment:
Betterment was one of the first robo-advisors. It also invests in low-cost ETFs and automatically rebalances your account.

Betterment charges $4 per month for balances under $20,000 so you would have to pay to use the service. For higher balances, you'll be charged 0.25% annual fee for balances of $20,000 or more, or if you set up recurring monthly deposits totaling $250 or more.

However, it offers tax loss harvesting and a bigger variety of portfolio options, which could give them the edge over Ally.

Another possible advantage is that investors with over $100k can choose to upgrade the plan to include unlimited access to human advisors.

Ally Invest Robo vs Self-Directed
If you prefer to manage your own investments, including buying, selling, and deciding when the time is right, Ally Invest Self-Directed is a better option.

The trading fees are some of the lowest in the industry. And the trading platform is robust and user-friendly. As an extra incentive, all new accounts will receive 90 days of free trades, up to $500 in value.

Ally Invest vs Wealthfront
Wealthfront is another frontrunner when it comes to robo-advisors. Wealthfront offers more diversified asset classes that include real estate and natural resources. It also offers tax loss harvesting to all clients, and more advanced strategies for those with $100k+.

Wealthfront also offers free advanced financial planning tools to help you stay on track with your goals. This includes retirement, mortgage, and education calculators.

Bottom Line

It's hard to beat the 0% advisory fee offered by Ally Invest Robo Portfolio. And with the low $100 minimum, this makes it great for those who want to try a robo-advisor without committing too much money. It's also good for existing Ally customers who to try the service.

There are downsides though, such as the lack of tax loss harvesting and high cash percentage. If these don't sit well with you, there are many options out there. Make sure you weigh the pros and cons of each before choosing the robo-advisor that is right for you.

Donna Tang is a content associate at CreditDonkey, a personal finance comparison and reviews website. Write to Donna Tang at donna.tang@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.


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