Summary: FutureAdvisor Review – Ranking and Reviews (Robo-Investing)


At its core, FutureAdvisor is an electronic, easy-to-access tool that replaces your traditional financial advisor and provides a full range of financial services at a fraction of the cost.

Available in both web and mobile forms, the services that the FutureAdvisor app provides can be placed into three main categories: retirement planning, investment management, and college savings.

Financial services offered by the FutureAdvisor app include:

  • Index fund management
  • Personal diversification recommendations
  • Re-balancing recommendations
  • Tax harvesting
  • College planning (specifically with 529 plans)

Based on the Modern Portfolio Theory, which gives do-it-yourself investors a chance to make real gains without a financial background, the FutureAdvisor app syncs up with your investing accounts and analyzes everything through their dashboard before providing you with specific recommendations based on your portfolio and financial goals.



How FutureAdvisor Works

FutureAdvisor is led by a team of data scientists, finance professionals, and software engineers.

The first step is to sign up for a FutureAdvisor account on their website, where you can choose between the free advice platform and the paid active management service.

Here is a quick glance of FutureAvisor app costs:

  • Management Fee: 0.5% (a number of other services are provided for free)
  • Account Minimum: $0
  • Current Promotion: 3 months of free portfolio management

Either route you choose, once you start, the FutureAdvisor app will automatically start linking your investing accounts. You can also manually input your assets and holdings. The service then analyzes everything via the dashboard and provides analysis and recommendations.

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Image Source: BigStock



Active Portfolio Management

On the investment side, the FutureAdvisor app provides direct management of both taxable investment accounts, like mutual and index funds, as well as tax-exempt investments like 401(k)s or IRAs, including Roth, rollover, or SEP. This is the only paid feature with FutureAdvisor, and investment users are liable for a 0.5% fee.

It is also important to note that the FutureAdvisor app only offers active management of assets that are brokered by Fidelity or TD Ameritrade. Fees charged by these brokers are additional, meaning they are not included in the 0.5%.

To calculate the best investment route for its users, FutureAdvisor takes into account the user’s age and risk tolerance to create their ideal portfolio. With direct management, the user grants FutureAdvisor the authority to trade their accounts on their behalf.

FutureAdvisor also manages their client’s employer-sponsored retirement plans. It does this by diversifying the directly managed accounts to balance the holdings in the employee’s 401(k) or their employer-sponsored plan. If the right balance or diversification level is not reached through the directly managed accounts, FutureAdvisor will recommend investment moves for the client to make within their employer-sponsored plans.

There is also a tax harvesting feature that monitors your current holdings to find ways to harvest those losses by balancing them with possible tax gains of at least $1,000.



Advice & Recommendations

On the advice side, FutureAdvisor handles no activity. It simply helps the client track and manage their accounts, as well as offering the information and advice they need to reach their financial goals.

Most FutureAdvisor reviews note that the system does not provide the daily budgeting feature of services like Mint. However, it does provide personal financial direction and advice for college planning (specifically with 529 plans), retirement planning, and investments.

With retirement planning, the FutureAdvisor app breaks down their recommended plan in nine simple steps that can be seen easily from their platform, which displays these changes and updates in real time.

It is also important to note that FutureAdvisor has recently revamped their services to include offerings that help their users reach specific life and personal goals, such as buying property or taking extended trips overseas.


History of FutureAdvisor                    

Bo Lu, co-founder of FutureAdvisor in 2010, said his original goal was to create a platform in which his clients could get a holistic view of their finances. His motto of encouraging “responsible investing” began when he witnessed his parents go from poverty to riches and back again after the tech bubble crash of the early 2000s.

Today, FutureAdvisor manages just under $700 million in assets and is quickly becoming a powerhouse in the robo-advice space. It is backed by the same venture capital team that back Paypal and Google and places emphasis on value and small-cap funds to offer their clients greater long-term returns.

Most recently, FutureAdvisor gained attention in the financial world after it was purchased by the global investment corporation, BlackRock Inc., in 2015. The company saw FutureAdvisor as the best way to add an automated arm to their investment offerings.

This acquisition also showed us two very important things about FutureAdvisor:

  1. Robo-advisors are here to stay.
  2. FutureAdvisor’s software is valuable even within the inner circles of the financial world.

In fact, the most recent FutureAdvisor reviews say the company’s technology allows the average DIY investor much cheaper access to financial advice. What’s more, their new software incorporates deposits and can handle re-balancing when a client’s portfolio veers too far from their original plan.



Again, all of this is done without the help of human hands.

In the free version of the FutureAdvisor app (which does not include active management), users receive rebalancing recommendations on their current assets 2-4 times per year, depending on the level of changes in their portfolio.

Through FutureAdvisor, BlackRock will gain a competitive edge in the market. The tool will be branded as “FutureAdvisor Powered by BlackRock Solutions.”

The Competition

FutureAdvisor’s primary competitors are similar robo-advisors, or online investment services like Personal Capital, Betterment, and Wealthfront.

Both Betterment and Wealthfront have raised over $100 million in venture capital. They also both hold more than $2.6 billion in managed assets, compared to FutureAdvisor, which manages under $700 million in assets and raised $21.5 million from investors before the BlackRock acquisition. Also, the venture tracking platform PitchBook gave FutureAdvisor a valuation of $48 million in 2014, compared to Wealthfront’s $700 million.

However, FutureAdvisor is similar to Betterment in that they will perform the trades for you within supported brokerage accounts (currently only with TD Ameritrade and Fidelity), though FutureAdvisor clients who have also used Betterment largely agree that Betterment’s “asset allocation wheel” gives more flexibility and considers a wider range of options.

It is clear that the company has a long way to go if it plans to reach the level of its competitors, but if co-founder Bo Lu’s theory that “convenience wins above almost all else” holds, then the help from BlackRock might just launch them into the level of their peers.



FutureAdvisor Pros

  • Flexibility: With Betterment and Wealthfront, clients must transfer assets to the firm to conduct trades. FutureAdvisor, on the other hand, provides clients recommendations based on their current portfolio.
  • Tax loss harvesting: Clients can decrease their tax liabilities by pairing up their investment losses with their gains.
  • 529 account management: Unlike ALL other competitors, FutureAdvisor offers active college savings plan management and even helps with distributions. The only fees you pay are those incurred from any ETFs you already have in your 529 plan.
  • Free advice: New clients can try the service out at no cost; currently, there is even an option to try active management of index funds for 30 days without paying the standard 0.5%. This is the main compliment found among FutureAdvisor reviews.
  • Review your trades: FutureAdvisor always reviews a client’s existing investments and takes tax implications into account before making recommendations.
  • Link brokerage accounts: The FutureAdvisor app allows you to automatically link up your brokered assets with their platform. However, this is currently only available with TD Ameritrade and Fidelity assets.

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Image Source: BigStock



FutureAdvisor Cons

  • Limited in scope: Despite its user-friendly platform, FutureAdvisor cannot be used for overall financial planning. Unlike Personal Capital or Mint.com, the system does not allow for daily finance and budgeting. 
  • High Fees: Compared to most other robo-advisors, FutureAdvisor is on the expensive side. This is the number one complaint of FutureAdvisor reviews.
  • Limited allocation of assets: When compared to Betterment, FutureAdvior’s asset allocation is not as flexible.                                  

Is FutureAdvisor Safe?

Another common criticism of FutureAdvisor is that little information is available about how funds are kept safe. In fact, one particular FutureAdvisor review came from an investor who was looking for a way to regain his losses after the housing bubble burst of 2008.

He was disappointed to see that his returns had gone down more than 5% since moving his funds into FutureAdvisor 18 months prior.

However, on their website disclaimer, FutureAdvisor notes that “timing of transactions and market conditions prevailing at the time of investment may lead to different results.” In other words, while they market their “intelligent investing” approach to DIY investors, they cannot guarantee results, as they do not control the market.



Is FutureAdvisor Right For You?

Are you tired of paying high fees for a financial advisor who cannot guarantee results? Do you follow the advice of financial icons like Jack Bogle or David Swenson and believe that long-term investments in index funds will outperform short-term mutual fund management every time?

If so, then FutureAdvisor might just be the app for you.

If you are looking for a tool that can provide a snapshot of the tax savings moves you can make with your current investments or how to get the most of your 401(k), you might also find FutureAdvisor to be the best robo-advisor for you. Also, FutureAdvisor might be right for you if you are a:

  • Current TD Ameritrade or Fidelity account holder
  • Do-it-yourself investor
  • Near-retiree looking for 401(k) advice
  • Parent saving for college
  • Hands-off investor who wants inexpensive access to financial advice
  • Startup or first-time investor looking for a free source of financial advice

You may, however, want to steer clear of FutureAdvisor if you fall into one of the following categories:

  • Investor looking for a guaranteed source of return
  • Investor looking for the lowest-cost robo-advisor on the market
  • Investor who prefers a lot of flexibility with your asset allocations
  • Person who prefers a personal connection when it comes to your investments
  • Anyone looking for both an investment tool and a personal finance tool


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