WiseBanyan Expert Review 2018 – Free Robo-Advisor
The Best WiseBanyan Free Robo-Advisor Review – 2018
It seems as if everywhere you turn, you’re getting the advice to start investing now. That’s because your retirement future is now your responsibility. Even if you have a good job, the days of a company pension are long gone. Social Security benefits won’t be large enough to live on when you retire. So, if investing for your retirement, or other goals, is important – even if you’re smart as a whip – you may not know how to invest.
This comprehensive WiseBanyan review will provide answers to all of your questions including a features overview, the sign up process, a detailed description, list of available funds and a synopsis of WiseBanyan pros and cons.
WiseBanyan Features – At a Glance
|Overview||Free automated investment management robo-advisor.|
|Minimum Investment Amount||$1|
|Fee Structure||Zero account management fees. Optional Tax Protection Package- fee 0.25% AUM on taxable accounts only, with $20/month cap.|
|Top Features||Auto deposit, automated financial advice, rebalancing & tax-loss harvesting.|
|Free Services||Investment portfolio management, automated financial advice, ability to create & fund multiple milestones (goals), rebalancing & auto deposit.|
|Contact & Investing Advice||Phone contact available M-F 10A - 8P ET, Email – 24/7. Automated investing and financial planning advice.|
|Investment Funds||Vanguard, iShares & SPDR ETFs.|
|Accounts Available||Personal investment accounts. Retirement accounts - Roth IRAs, traditional IRAs, SEP-IRAs & retirement fund rollovers.|
What is WiseBanyan?
“WiseBanyan’s mission is to ensure everyone can reach their financial goals, regardless of their starting financial situation.”
WiseBanyan bills itself as the “first free financial advisor”. Founded in 2013, the company began accepting clients in March, 2014.
At a recent conference, I met the founders of WiseBanyan, and they sparked my enthusiasm for this unique robo-advisor. How does no-minimum investment amount and no investment management fees sound? That winning combination, along with an easy to access app drove me to investigate further.
I had to ask Herbert Moore and Vicki Zhou, the co-founders of WiseBanyan…
Is it possible to get professional money management, for free? It sounds like an oxymoron. After all, we’ve been trained to believe that you must pay for money management services.
So how can WiseBanyan offer its users free financial management?
WiseBanyan is one of the few robo-advisors to offer their basic investment management services for free, with no minimum investment amount required. Study this comprehensive and best WiseBanyan Review to understand the benefits you’ll receive if you sign on with WiseBanyan along with the drawbacks, as we strive to give you non-biased and actionable robo-advisory information.
Meet the Founders of WiseBanyan
Like other robo-advisors, WiseBanyan encourages the prospective user to identify their financial goals or milestones, whether it’s retirement, saving for Jrs. college education or buying a jet ski. Next the app automates your financial journey. WiseBanyan provides its clients with tailored and optimally diversified portfolios to achieve their financial goals. WiseBanyan automates everything from portfolio rebalancing, to dividend reinvestment and recurring deposits.
Interested? Here’s a detailed drill down into how the platform works.
We’ll walk you through the sign up and initial questionnaire. In the end, you’ll get a summary of the WiseBanyan pros and cons.
Best WiseBanyan Review-Step-by-Step Introduction
When you click on WiseBanyan you’ll be invited to become a client. Just plug in your email address to get started. There’s no obligation to begin exploring the platform.
Here’s how “Simon” our fictional user progressed through the platform
1. To start, visit the homepage and plug in your email to get an immediate email invite.
2. As soon as you click the email link and return to the WiseBanyan site you’ll spend a few minutes answering a series of questions.
First, enter some basic financial information; your birthday, annual income and net worth. The user we created, Simon, was born in 1980, earns $80,000 and has a net worth between $25,000 and $50,000.
3. Next, you’re whisked to a goals page where you choose among the following milestones:
- Build Wealth
- Rainy Day
- Save Cash
- New Vehicle
Don’t worry, you’re not locking in your choice and you can add more milestones later. The opportunity to customize your goals gives you a chance to save for those special items like a llama for your back yard or start-up capital for a new business venture.
4. Simon decided to choose the “Rainy Day” milestone. This selection is not directed to a particular goal, but simply a way to increase available money for non-specific needs. You plug in the amount you wish to save within a specific time period. Simon set his goal to save $10,000 within a year and a half.
5. WiseBanyan has four questions designed to figure out how you’ll react to the potential drops in the investment markets. These types of questions are usually called “risk tolerance” queries. In the first risk question, you choose from 4 investment-related styles for this goal:
- Aggressive Growth
- Steady Growth
- Moderate Growth
- Loss Avoidance.
Simon chooses moderate growth for his rainy day fund.
Next come the additional “risk profile” questions. These are designed to determine how you’ll handle market volatility and guide the program to offer suitable asset allocation or investment percentages for you. Here’s where you dig deep and try to figure out which option seems right for you. Simon chose the 7% a year, with low risk portfolio.
This final risk tolerance question is your ‘gut check’. Investment values go up and down. If you put any of your cash into stock and bond funds, you’ll expose yourself to the possibility of profits and losses, as the stock and bond fund prices are volatile. It’s not unusual for a fund to drop 10% within a year. In most cases, after a price decline, the fund usually recoups it’s losses and advances in the future, but it could take awhile.
So, WiseBanyan wants to know if your investment portfolio declines 10% will you be tempted to sell and run for the hills or will you have the stomach to handle the decline without selling when prices are low. Simon indicated that if his investments lost 10%, he’d refrain from selling and keep all of the investment.
There’s one last “coin toss” question that attempts to cement whether you’re a conservative, moderate or aggressive investor.
That’s it for the questions. The entire process is very fast. If you need explanations for any part, there are helpful clarification tabs to click.
6. Next you get the Wisebanyan portfolio recommendation. Simon received an asset allocation or investment fund mix of 53% stock funds and 47% bond funds.
To find out the funds that are recommended for your personal portfolio, you hover over each of the colored sections of the circle and a ticker symbol for the fund appears.
In general, for money that you won’t need for an intermediate term, such as four to six years, this rainy day portfolio makes sense.
For an emergency fund it’s best to choose the cash milestone. That way you know the value of this milestone won’t ever decrease.
Following are the list of available WiseBanyan, low-fee exchange traded funds (ETFs). The nine available low-fee ETFs bring you exposure to vast segments of the stock, bond and real estate markets.
|iShares TIPS Bond||TIP|
|Vanguard Intermediate-Term Govt Bond ETF||VGIT|
|SPDR Blmbg Barclays ST HY Bond ETF||SINK|
|Vanguard Short-Term Corporate Bond ETF||VCSH|
|iShares iBoxx $ Invst Grade Crp Bond||LQD|
|Vanguard Total Stock Market ETF||VTI|
|Vanguard FTSE Developed Markets ETF||VEA|
|Vanguard FTSE Emerging Markets ETF||VWO|
|REAL ESTATE FUND|
|Vanguard REIT ETF||VNQ|
WiseBanyan Features – Free & Paid
After you complete the sign up process, your account is set up and automated deposits are scheduled. This robo is appropriately designed for the new investor or even one with some experience under his or her belt. It’s tough to beat professional management with no minimum investment amount or minimum fees plus a the diversified slate of funds.
Clearly, WiseBanyan needs an income stream to ultimately make money. So, although the initial sign up and funding of the account is free, you will pay for additional services. Unlike most other robo-advisors, WiseBanyan doesn’t charge a percent of assets under management (AUM). Their model allows you to choose additional value-added products and services.
Wisebanyan Free Features
- Free automated portfolio set up, according to your risk preferences.
- Availability to fund multiple goals within your account.
- Automated deposit.
- Rebalancing every time you make an account deposit, earn dividends or withdraw funds.
- No charge asset allocation management via an easy online slider.
New Free WiseBanyan Planning Service
This recently launched automated financial questionnaire is great to align your financial situation with your goals, remove risks and boost your investing efficiency.
This feature launches into a series of questions to personalize your investment path. After quickly responding to queries such as:
- Is this your only investment goal?
- Does your income change every month?
- What is your family composition and housing situation?
- Do you need help with; risk management, debt management, education or other?
Your responses drive more personalized investment suggestions.
WiseBanyan Paid Features
Naturally, if there were no charges what so ever, the firm couldn’t remain in business. So, WiseBanyan charges for additional service(s). There are also certain fees for specific activities.
Wisebanyan Tax Protection Package
This add on includes 3 services:
- WiseHarvesting-This tax-loss harvesting service sells losing funds and replaces them with similar ETFs, so that you can reduce your tax bill.
- Selective Trading-Let’s you eliminate certain ETFs (that you might own in another account) from trading in your Wise Banyan account, so you won’t run afoul of the IRS wash sale rule.
- IRA Conversions-Also known as a “Backdoor IRA”, this allows high income earners, unable to contribute to a Roth IRA to transfer funds from a Traditional IRA to a Roth to reduce long-term taxes.
The tax protection package fee costs 0.02% per month (capped at $20 per month) of AUM.
- Apex, the securities clearing company may have fees, that go directly to their company for paper check deposits, wire transfers, returned checks, and account transfers to another brokerage firm. This fee does not go to WiseBanyan, nor do they receive any kickbacks or compensation from this underlying fee.
- All exchange traded funds levy management fees that go directly to the ETF company. The selected WiseBanyan ETFs charge average 0.12% management fee. This fee does not go to WiseBanyan, nor do they receive any kickbacks or compensation from these fund fees.
WiseBanyan Review – The Pros and Cons
- Sound investment portfolio management for free.
- Free rebalancing-All other robo-advisors charge for fund management and rebalancing.
- Diversified selection of low fee ETFs-Broad exposure to U.S. and international stocks, U.S. bond universe and real estate.
- Transparent methodology.
- Transparent fee structure for add on services and affiliated charges.
- Ability to set up multiple portfolios.
- Cash option great for emergency funds.
- Easy sign up with ability to change allocations and seamlessly add goals.
- WiseBanyan Planning Service is helpful, especially for novice investors.
- Limited account availability, no joint accounts, no trusts.
- Only three stock ETFs. This is fine for most investors, but more sophisticated folks might like value, small and mid-cap ETF choices.
- Rainy day milestone design is too risky for short term goals. You need to select ‘cash milestone’ for your emergency funds.
- This option to a risk question, ‘Gain 7% with low risk’ is a mismatched combination. If you’re seeking a 7% return, it’s likely you’ll need a high allocation to stock funds, which are inherently risky.
WiseBanyan Review Wrap Up
There’s a lot to love about WiseBanyan. For the new investor, there is minimal downside. It’s an easy way to begin investing. For the intermediate investor, looking to slash fees and get professional portfolio management, WiseBanyan is also a viable option. The Wise Banyan Tax Protection Package is low priced at 0.25% per month with a $20 monthly cap. The most sophisticated investors, looking for various types of accounts and more stock market diversification, would be better served by a more comprehensive robo-advisor such as Betterment or Personal Capital.
*I signed up and funded a free WiseBanyan account as part of my research for this article and am pleased with the investment funds, transparency and asset allocation.
Updated; November, 2017. All features subject to change.
Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up through the affiliate link. That said, I never recommend anything I don’t personally believe is valuable.