WiseBanyan bills itself as “the world’s first free financial advisor,” and the company isn’t lying. If you want to start investing and don’t know where to begin, WiseBanyan can help you build a portfolio designed to help you reach your goals — without charging a management fee.
However, when you choose WiseBanyan, your account options are limited. As with its free investment account competitor, Robinhood, you don’t have as many choices for management. Additionally, unlike robo-advisors such as Betterment and Wealthfront, WiseBanyan charges an extra fee for tax-loss harvesting — a strategy for selling losing stocks to receive a tax deduction.
But for the beginning investor with small assets and a desire to start saving for goals ASAP, WiseBanyan can be a good choice.
With WiseBanyan, you don’t have to worry about account minimums, and you can invest without paying management fees.
On top of that, WiseBanyan is easy to use, whether you manage your account online or via the mobile app (for iOS and Android). WiseBanyan creates a portfolio for you using exchange-traded funds (ETFs), which are similar to mutual funds but traded like stocks. The company uses the principles of Modern Portfolio Theory and asset allocation to create a portfolio of stocks, bonds, and real estate based on how much risk is right for you.
Pros of WiseBanyan
The biggest advantage to WiseBanyan is that it offers free investing. Plus, unlike Robinhood (which also offers free investing), WiseBanyan creates a portfolio for you. Robinhood requires that you already have a general idea of what you want to do, and you have to execute your plan on your own.
WiseBanyan asks you a series of questions to get a feel for your goals to put together your portfolio. WiseBanyan suggests an asset allocation, using a combination of stock, bond, and real estate ETFs to help you reach your goals.
Another advantage to WiseBanyan is that there are no account minimums or monthly requirements. Similar goal-based robo-advisors sometimes charge management fees and usually have a financial commitment. Wealthfront, for example, requires that you start with at least $500. And, even though your first $10,000 is managed free, Wealthfront charges 0.25 percent annually after that. Betterment also charges 0.25 percent annually for its basic offering.
Another advantage to WiseBanyan is that the fund choices have very low expense ratios — annual fees all ETFs charge. While some of the funds have expense ratios on the high side, the average expense ratio is 0.12 percent. According to a Morningstar analysis, the average expense ratio across all funds was 0.57 percent in 2016.
Finally, WiseBanyan recently launched a planning feature that helps you navigate your financial future. The idea is to help you take action as you tweak your plan over time. With this feature, WiseBanyan offers new recommendations based on where you’re at related to four strategy stages:
- Getting Started
- Building Your Foundation
- Removing Risk
- Increasing Efficiency
This is an interesting twist on robo-advising that acknowledges your goals are likely to evolve — or even change completely — as you go through life.
Cons of WiseBanyan
While WiseBanyan has enough different funds to provide a reasonably diverse portfolio, the selection is nevertheless somewhat limited (although it’s still on par with Betterment’s offerings). Robinhood offers access to more than 5,000 securities: individual stocks as well as a variety of ETFs, including access to commodity and real estate ETFs.
Another downside is the limited choice of account types. You can open an individual taxable account or an IRA account, but there is no option to open a joint account with your spouse or a custodial account for your child. Betterment and Wealthfront both offer joint accounts. However, neither Robinhood nor Acorns offer IRAs.
Additionally, while WiseBanyan offers explanations of its philosophy and provides FAQs, it doesn’t offer research tools. If you want more control over the trading experience, WiseBanyan is not for you.
As noted above, other than the expense ratios on the ETFs, WiseBanyan is completely free for its basic product.
However, WiseBanyan does offer a premium tax-loss harvesting service called Tax Protection. The monthly cost is the lesser of 0.02 percent or $20. You need a taxable account to be eligible. Tax Protection also helps you avoid falling afoul of IRS regulations and can assist you with IRA conversions.
How to sign up with WiseBanyan
It took me five minutes to open an account with WiseBanyan. Start at WiseBanyan.com and fill out your basic information.
Next, I answered a few questions about my risk tolerance and goals. Other information I provided throughout the signup process included my name, address, and Social Security number.
Along the way, I received helpful hints to guide the process. If a recommended goal doesn’t make sense, it’s possible to adjust the goal. For many beginning investors, trying to save $15,000 in 18 months for an emergency fund can seem overwhelming — even with the investing. However, WiseBanyan makes it easy to modify the goal to better match your circumstances.
It’s also a nice touch that WiseBanyan uses an annual spending goal when walking you through your retirement account setup. It puts into perspective how much you want to live on each year, rather than dangling a huge total nest egg estimate in front of you.
Once you’ve set your goals, you can review your asset allocation. Recommended allocation is based on risk tolerance and timeframe. However, there is a slider underneath that allows you to adjust your allocation if you feel it is too aggressive (or not aggressive enough).
Next, I set up information for my auto-deposit. WiseBanyan shows you how much you need to add to the account each week to reach your goal.
You don’t have to use the auto-filled information and can reduce the amount and the frequency. However, the likelihood of reaching your stated goal decreases if you drop below the recommendation. You can also go back to an earlier stage to adjust your goal if you realize you’ve been unrealistic.
Connecting a bank account is simple: Just enter your routing and account numbers and authorize the transfer.
Finally, once you finish setting up your account, you have immediate access to your dashboard, which lists your goals and funding plan. Using the sidebar, it’s easy to navigate so you can add additional goals, manage your plans, and change your settings.
Everything online appears clean, and the navigation is intuitive. The mobile app is similarly attractive and easy to use.
WiseBanyan customer service
WiseBanyan runs customer service through Zendesk. Access support by logging into your account and clicking on the lower right in the sidebar menu. Send a message, and someone will get back to you. You can email directly to firstname.lastname@example.org.
Is WiseBanyan right for you?
Hopefully, this WiseBanyan review has helped you figure out if this trading program is the right move for you.
The low barrier to entry and the step-by-step way WiseBanyan helps you identify your goals makes it ideal for those who don’t have a lot of assets or don’t know where to start with investing. If you want a “set it and forget it” approach with guidance and tweaks over time, WiseBanyan can be a good way to take action.
However, if you want more control over your portfolio and individual securities, WiseBanyan is not for you.
Take a look at your circumstances and your long- and short-term goals to decide what investment broker is likely to work for you.
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