These days, most online brokerages offer no-commission trades for stocks and exchange-traded funds (ETFs). Ally Invest is no different in that sense. But what helps it stand out from the crowded field of robo-advisors is its zero management fee. Most robo-advisors charge an asset-based fee that typically runs from 0.25% to 0.50%.
Ally Invest is the former TradeKing platform, which Ally acquired in 2016. Since then, the service has grown and today is one of the heavy-hitters in the online investment space.
Ally Invest offers two options: its robo-advisor, now called Cash-Enhanced Managed Portfolios, and a trading platform for active investors. The former is great for people who are new to investing or just want someone else to manage their investment portfolio for free. The program takes your goals and financial situation into account to tailor your portfolio. As your time horizon changes or your asset allocations shift, the robo-advisor will automatically rebalance your account.
In addition to the set-it-and-forget-it option, Ally Invest offers what it calls its Self-Directed Trading program. This is for hands-on investors. On Ally's trading platform, you have access to a variety of futures, forex, mutual funds, stocks, bonds, ETFs and options. Stock and ETF trades are on a commission-free basis, while options trades have a $0.50 per contract fee. There is no minimum balance requirement to open a self-directed trading account with Ally Invest.
You'll also have access to financial tools and education. Covering basic and sophisticated topics, these can help new and experienced investors.
Ally Bank customers; small investors; hands-off investors, active traders
Robo-advisor always puts 30% of account in cash, regardless of time horizon or risk tolerance
Pricing: How Much Does Ally Invest Cost?
|Option Name||Management Fee||Minimum Balance||Features|
|Self-Directed Trading||$0 stock and ETF trades, $0 options trades + $0.50 per contract fee, $1 per bond, $9.95 per no-load mutual fund||$0||Hands-on investing; wide variety of investments to choose from; ability to stay on top of the market with live updates|
|Cash-Enhanced Managed Portfolios||0%||$100||Professionally designed and personalized portfolios; automatic rebalances; 24/7 customer support|
Cash-Enhanced Managed Portfolios
How much you pay for an Ally Invest account depends on the account type. Self-Directed Trading accounts are largely fee-free, as stock and ETF trades have no fees attached to them. Additionally, options contracts have no trading fees, though there is a per contract charge of $0.50. Bonds are available at a price of $1, though there is a minimum of $10 at this price. Other fees you may see include no-load mutual funds at $9.95 per trade and a number of service fees for certain transfers and transactions, like returned checks and IRA transfers.
The Cash-Enhanced Managed Portfolios account comes with no annual or advisory fees. In fact, there are essentially no fees associated with this program, and the minimum investment is just $100.
Ally Invest's Investing Strategy
Whether you choose a Self-Directed Trading account or a Cash-Enhanced Managed Portfolios account, Ally Invest promises to provide you with low-cost funds. This allows your money to grow faster.
If you go the Self-Directed Trading route, you can buy and sell stocks, bonds, ETFs, futures, foreign exchange funds, options and mutual funds yourself. You'll enjoy no or low commission fees, plus no minimum account size requirement. Plus, you have access to tools to stay on top of the market and best calculate your trading moves. You also have 24/7 customer service if you have a question or need help.
If managing your own investments isn’t your thing, you can go for a Managed Portfolio. This places your portfolio in the hands of Ally Invest and its investing technology. Once Ally has assessed your time horizon, risk tolerance and investing goals, you’ll receive asset allocation recommendations, generally various ETFs, for your portfolio. Should one sector outperform or another underperform, the company's program rebalances your portfolio regularly.
In addition to ETFs, your account will always be 30% in cash. Ally calls it a "cash buffer." It's handy to have cash in volatile times, but this much in cash is also probably how the company makes money while not charging management fees.
- Individual and joint taxable accounts
- Roth IRA
- SIMPLE IRA
- Rollover IRA
- Business accounts
Certainly a key feature is the opportunity for any kind of investor to open an account. Those more experienced with investing can open a self-directed account. On the other hand, those who are new to investing, or don’t have the time to design and build their own portfolio, can also open a Cash-Enhanced Managed Portfolios account.
Ally offers a wide variety of investments to make your portfolio diverse and secure. You can choose from stocks, bonds, mutual funds, ETFs, options and more. If Ally's robo-advisor manages your portfolio, it will tailor your investment mix to you and your savings goals. As some sectors out- or under-perform, the robo-advisor will rebalance your investments.
Plus, no matter which account type you choose, Ally Bank will keep you informed and educated about investing. You gain access to a number of tools, articles and advisors to help you understand investing and make better investment decisions. Tools include streaming charts, a profit/loss calculator, a profitability calculator, watchlists, market data and options chains.
As an entirely online bank, there's the convenience of a mobile app across multiple platforms and an easily accessible website. That way you can access your account to view your portfolio, make trades or learn more about investing just about anywhere and at any time.
Ally Invest Securities, LLC is a member of the Securities Investor Protection Corporation (SIPC). This provides protection on your accounts up to $500,000. Ally Invest provides additional coverage of up to $37.5 million, including up to $900,000 in cash with an aggregate cap of $150 million. Plus, it promises a secure connection when accessing and managing your accounts.
Who Ally Invest Is For
With its two types of accounts, Self-Directed Trading and Cash-Enhanced Managed Portfolios, Ally Invest opens up its services to almost any kind of investor. If you want to be more hands-on with your portfolio, you can open a Self-Directed Trading account. That way you can choose your own investments. You can invest and trade as you see fit, according to your savings goals and willingness for risk.
However, if you don’t quite have the experience or time to manage your own portfolio, you can open a Cash-Enhanced Managed Portfolios account. That way you can put your investments and savings into the hands of experts. You also have access to a ton of educational material, if you want to learn more about investing. You do have to have a balance of at least $100, in order to begin investing with a Cash-Enhanced Managed Portfolios account. So if you’re not comfortable with that sum, you may have to look elsewhere.
If you have more $25,000 in investable assets, you may want to consider getting a human advisor instead. You can use SmartAsset's financial advisor matching tool to get matched with an advisor in your area who suits your needs. To learn more about different individual advisors in your area, explore SmartAdvisor Match.
- Automatic rebalancing
- Tax-loss harvesting
- Direct indexing
- Fractional shares
- Human advisors
How Ally Invest Works
Depending on which kind of account you choose to open, Ally Invest works slightly differently. For its managed portfolios accounts, it starts by analyzing your investing and savings goals. It takes into account your age, what you’re saving for and your investing strategy, including how much risk you’re willing to take on. From there, it can begin making the most appropriate portfolio for you. Ally initially recommends to investors its Cash-Enhanced Managed Portfolios. Investors can select from Core, Income, Socially Responsible or Tax-Optimized portfolios.
Ally's tools look through thousands of ETFs and its website provides information on ETFs including the risks they can pose. This information may help you make a more informed decision about whether a managed portfolio is right for you. After the original setup of your account, Ally Invest will continue to monitor your portfolio. It will automatically rebalance and adjust your investments as needed when changes come along. Some such changes include market fluctuation or your ideal retirement age, if you’re saving for retirement. Account monitoring and rebalancing is done through technologies and not by actual advisors. You may also make additional deposits into your account to increase your investments.
There are no annual fees with Ally's Cash-Enhanced Managed Portfolios program. To actively invest with Cash-Enhanced Managed Portfolios, though, you will need a starting account balance of at least $100. You may open your account as an individual account, joint account, traditional IRA, Roth IRA, IRA rollover or a custodial account.
Then there is the Delf-Directed Trading account. Rather than put your investment portfolio into the hands of Ally’s system, you get to call your own shots with help from its tools and information. You do your own trading of stocks, options, ETFs, mutual funds and bonds with a Self-Directed Trading account.
One tool that would be available to you is streaming charts. These different types of charts allow you to study and analyze how certain investments are performing. You can even customize this tool so you can better see what you’re most directly interested in. A profit/loss calculator can help you calculate the loss or profit you could see from a trade before you make it. You can also create your own watchlists to keep an eye on groups of securities. Ally Invest offers a number of other tools and educational materials to help you make the best decisions when it comes to your portfolio.
Since you are managing your portfolio yourself, you won’t have to pay an annual fee. Instead, you pay trading fees yourself, but Ally offers low or nonexistent rates. Stock and ETF trades are free, as are options trades. However, each options contract you buy comes with a $0.50 fee. Bonds always cost $1 per bond, and no-load mutual funds will run you $9.95 per trade.
No matter which account type you choose, you’ll have access to Ally’s website and mobile apps. You can make changes and trades no matter where you are. You also have 24/7 access to customer service representatives and brokers to help with any questions or concerns you have, whether it’s about your account or investing strategy.
What’s the Catch?
Every robo-advisor is going to be different, especially depending on what services they offer. In this case, Ally Invest takes the term robo-advisor to heart since you and your investment portfolio aren’t automatically seen and assessed by a human advisor. Your portfolio is mostly managed by its tools and online systems. Every rebalance is done with technology rather than an advisor looking at your account.
Of course some investors may not mind this system. But others may want a more personal experience when it comes to their portfolio and rebalancing. That isn’t to say that you cannot contact an advisor. You do have 24/7 access to customer service representatives and brokers. You can reach them by phone, by email or through an online chat. These brokers can help you understand investing, make better investing decisions and manage your account.
When it comes to a Cash-Enhanced Managed Portfolios account, you will need a minimum of $100 to begin investing. This is not an exorbitant minimum, but it may be a deal-breaker for some who hoped to ease into investing with a smaller sum.
Ally Invest has proven to be a useful tool for all types of advisors, whether you want to be hands-on with your investments or not. But as helpful and convenient as a robo-advisor like Ally Invest can be, working entirely online isn’t always the right move for every investor. With Ally Invest, you’ll have to be comfortable not having immediate access to your own personal advisor. You also won’t have a human advisor looking over your portfolio to rebalance it or make changes according to sudden changes in your financial situation. Rebalances with Ally Invest are automatic. For other changes, you’ll need to log in to your account to update your information manually.
It’s this lack of human interaction and participation that drives many investors to work with an in-person advisor instead. Working with a human advisor allows you to explain your financial situation and goals more clearly and, from that, build an even more personalized investment portfolio. This becomes especially helpful when strategizing for your unique financial situation. For example, an advisor can better help you plan to send your three kids to college and move into a new home than a robo-advisor algorithm can.
If you think you’d like to work with an in-person financial expert, SmartAsset can help you find the right advisor. We’ll connect you with an advisor who works in your area. To start, you’ll answer a few questions to help us figure out what you want and need from a financial advisor. This includes your retirement plans, investment goals and current financial situation. We’ll take into account your personal preferences, too, like if you specifically want to work with a female advisor. Next, we’ll show you three advisors who match your preferences. You can then use our online tools or concierge service to book an appointment with an advisor. When choosing a financial advisor, it can help to meet with multiple advisors. That way you can really get a feel for which advisor you’ll work best with.
Competition: How Ally Invest Stacks Up?
Of course, Ally Invest isn’t the only robo-advisor who offers investment products to all sorts of investors. Its free stock and ETF trades and other low prices put it in competition with some big financial names, like Schwab, E-Trade and Merrill Lynch.
E-Trade’s similar offering is its Core Portfolios, what it calls an “automated advisory solution.” E-Trade also guarantees diversified ETF portfolios at the same annual price of 0% of your account balance. However, you need double the minimum account balance that Ally Invest requires, with E-Trade requiring at least $5,000.
Like Ally Invest, E-Trade Core Portfolios employs technology to monitor and rebalance your portfolio. You do have access to customer service and advisors but the managing is mostly done with technological systems.
Merrill Lynch offers a more expensive alternative to Ally Invest and E-Trade Core Portfolios with Merrill Edge Guided Investing. Merrill Edge Guided Investing provides more of a choice than E-Trade does, with products available to different kinds of investors whether hands-on or not. When you choose to trade and invest online yourself, you will see a higher price of $6.95. There is an opportunity to qualify for $0 trades, though, with preferred rewards. If you choose to go with Merrill Edge Guided Investing, you will also see a higher annual fee and minimum balance requirement of 0.45% and $5,000 respectively. This option allows you to invest online and benefit from professional advice and management.
Merrill Edge also offers the Merrill Edge Select? Portfolio, a more advanced type of managed portfolio. You can be as risky as you want with this investment portfolio. This option charges an annual fee of 0.85% of your account balance. There is a steep minimum account balance requirement of $20,000. However you get to meet with a Merrill Edge Financial Solutions Advisor™ at least twice a year.
Bottom Line: Should You Use Ally Invest?
When looking for investment help, it’s important to first know your own savings and investment goals as well as your own level of investing know-how. Luckily, Ally Invest offers products for you no matter how experienced you are with investing or not. The self-directed trading and Cash-Enhanced Managed Portfolios accounts will appeal to hands-on investors and investors who would prefer to be less involved in their investments, respectively.
Not only does Ally Invest provide products for a range of customers, but it also offers low fees for its services. Being that there is no annual fee for the Cash-Enhanced Managed Portfolios program, it's far cheaper than a traditional financial advisor. However, the company doesn’t automatically provide real advisors, doing most of its assessment and rebalancing through technology. This feature can be a positive or negative, depending on what the individual investor is looking for.
Tips on Saving for Retirement
- As a robo-advisor, Ally Invest can only offer so much in terms of human and personalized advice. It makes for a convenient investing experience, but perhaps you want an in-person advisor who can get to know you and your financial goals. SmartAsset makes finding a financial advisor easier with its advisor matching tool. After you answer a series of questions on your finances, we can pair you with advisors in your area.
- To the opposite, perhaps you want to take a more DIY approach to your retirement savings. Using tools like our 401(k) calculator can help you keep track of your savings and better plan for your future.