United Income Review – Robo-Advisor for Retirees Only
United Income Expert Review
By, Kevin Mercadante
United Income is a Washington, DC, based investment advisory that launched in September, 2017 with backing from Morningstar and eBay founder, Pierre Omidyar. It was founded specifically for retirees, age 50 to 70, based on the realization that people are living longer in retirement, and investing needs to accommodate that reality.
United Income uses the most sophisticated investment management available. The company makes use of evidence-based investing, and factor-based investment strategies, targeting securities with traits that have historically enjoyed higher returns, lower risk or a combination of both. Factors include quality, value, momentum, size and low volatility.
Their portfolios also make heavy use of global diversification of both stocks and bonds. Research has indicated that such a portfolio outperforms a U.S.-only portfolio, and does so with less volatility.
What’s more, United Income moves beyond investments, providing various services specifically tailored for retirement. An example of this is their “retirement paycheck”, making it easier for retirees to budget their money, just as they did when they were receiving a regular paycheck.
United Income Robo-advisor Features at a Glance
|Overview||Automated investment management robo-advisor platform, designed specifically for retirees|
|Minimum Investment Amount||Self Service, $10,000; Full Service, $300,000|
|Fee Structure||Free version; Self Service, 0.50% of AUM; Full Service, 0.45% to 0.80% of AUM|
|Top Features||Platform is designed specifically for retirees, and includes numerous related services; also attempts to outperform the market, not just match it. United Income paycheck distributes a monthly check to you (from your account).|
|Free Services||One-time financial plan and Social Security advice|
|Contact & Investing Advice||Phone and email, for customer service and investment advice|
|Investment Funds||Diversified, low-cost index funds (ETFs) from US and Global stock and bond markets|
|Accounts Available||Individual and joint taxable accounts; traditional and Roth IRAs; Trusts|
What Differentiates United Income Robo-Advisor From Competitors
One of the biggest differences between United Income and other robo-advisors is that they design investment portfolios to outperform the underlying benchmark. This is unlike other robo-advisors, who generally seek only to match benchmarks.
The most obvious difference however is that United Income was created with retirees in mind. They offer a number of retirement specific services (see below), but also help you with the following through their Concierge Service:
- Enroll in Social Security benefits
- Enroll in Medicare benefits
- Find supplemental health insurance
- Consolidate financial accounts
- Manage required minimum distributions
- Withdraw from 401(k) plans
- Recommend elderly care services
- Find experiences you’ll enjoy
United Income stands out as the only robo-advisor with a focus on how to turn wealth into an income stream in retirement.
Who Benefits from the United Income Robo-Advisor?
United Income primarily benefits retirees, and those very close to retirement. It takes into consideration the specific needs of retirees. That includes not just investment management, but also budgeting for the unique needs of the retirement years, as well as allocating investment accounts in such a way that you will not outlive his or her money.
The platform deals with the full range of retirement related topics, including Social Security, Medicare and health related issues. It also allocates money to specific retirement related goals, including the following:
- “Essentials” – Your savings dedicated to your basic living expenses
- “Lifestyle” – Savings dedicated to adventures, like travel
- “Healthcare Spending” – Accounts dedicated to the unique health care needs of retirees
United Income Robo-Advisor Drill Down
Personalized Investment Portfolio and Management. United Income breaks down your portfolio. There’s a specific investment strategy for each of life’s needs. For example, the accounts that provide your essential spending will be held in low risk, highly liquid investments.
Tax-optimized investing. This includes tax-loss harvesting – a strategy in which underperforming assets are sold off to generate losses against winning positions. Following the sale, they immediately invest the proceeds in similar assets, maintaining the desired portfolio allocation.
They use other strategies as well. For example, United Income seeks qualified tax treatment of dividends. They also invest primarily in exchange traded funds (ETFs), since they trade much less frequently, and therefore generate fewer capital gains.
Automatic Rebalancing. Your portfolios are rebalanced “opportunistically and strategically”. This is the make sure your portfolio remains in line with the designated investment strategy determined to be best for you. They also work to minimize any tax consequences that may result from rebalancing in taxable accounts.
United Investment Account Levels
United Income offers three service levels:
- Free Service
- Self Service
- Full Service
Each provides very different service levels, investor requirements, and has its own unique fee structure:
United Income Free Service
As you can see from the screenshot above, the Free Service is very basic. There is no account minimum, and no fee for participating. But it provides just two services, a one-time financial plan and Social Security advice. No actual investment management is provided.
United Income Self Service
This service level requires a minimum investment of $10,000, and has an annual account management fee of 0.50%.
The main difference between the Self Service in the Free Service is that it does provide investment management. It also includes the United Income Paycheck service (see description below), as well as technical support.
United Income Full Service
The Full Service comes with all the services of the Free and Self Service packages, including of course, investment management. But it also adds an annual check in with the financial advisor, as well as the assignment of a personal financial advisor.
List of Low Fee Robo-Advisors
Concierge services include both Personal Retirement Transition and Personal Financial Services. The Personal Retirement Transition feature is particularly interesting. When you retire, they fill out the necessary paperwork for you. They even send you emails about opportunities to extend your interests, hobbies, passions and dreams. This can include everything from volunteering opportunities to taking on new adventures.
The Full Service pricing schedule is as follows:
- First $500,000, 0.80%
- Next $1 million, 0.75%
- Next $2 million, 0.65%
- The next $6.5 million, 0.55%
- Over $10 million, 0.45%
United Income Retirement Services
United Income is first and foremost designed to benefit retirees. They offer the following retirement services:
Account sequencing. This is a process that prioritizes spending money from certain accounts, while maintaining investments in others. Some accounts provide withdrawals for income, while others continue to grow for the future.
Budgeting. You get a personalized spending plan. This is based on United Income’s research showing that retirement spending will change throughout retirement. They use technology to create personalized spending plans to accommodate basic living expenses, as well as the pursuit of dreams and experiences.
Financial Planning. United Income believes financial planning should continue beyond retirement. They use proprietary technology integrating the world economy, your finances, investment markets, government policies, tax codes and big data into a single decision-making platform.
Health Spending Plans. Recognizing that everyone has a different health profile, United Income creates a personalized health spending projection and plan to manage your money to cover those expenses. It’s based on changes in your health, the market, and other variables.
Legacy and Gift Planning. United Income creates plans to help you maximize the financial impact of your gift giving.
Social Security. United Income assesses up to 64 different claiming strategies to create a personalized Social Security strategy for you. They even have former Social Security officials on staff, to help you maximize your benefit.
Trusts. These provide control of your assets and discretion from the legal process at the end of your life. United Income can accommodate 26 different trust types.
United Income Paycheck. Your investment income can be distributed from your portfolio, just like a monthly paycheck. The amount is recalibrated over time, based on your account balances and spending needs. They even handle required minimum distributions for you, when you turn 70 ½.
United Income Robo-Advisor Sign-up Process
You can apply on line, with an application process that uses several easy to complete screens. You’ll need the following information to complete the application:
- Your name and date of birth
- Male or female
- Your education level
- Question: Do you think you make less, about the same, or more than others in this country?
- What describes your current work status? (Retired, partially retired, working full-time, working part-time, something else)
- Which activity best captures your favorite dream? (See screenshot below for a list of answers.)
Once you’ve completed the questionnaire, you’ll be given a choice to either:
- Get started on your free financial plan, or
- Get in touch with an advisor.
After that, you provide your phone number and create a password for your account. You’ll then be ready to fund your account, and choose the accounts you want to include.
Find out; How do Robo-Advisors Work?
United Income Robo-Advisor Pros and Cons
United Income Robo-Advisor Pros
- Services designed specifically with retirees in mind. This includes budgeting, and specific categories critical to retirees, such as healthcare spending, and maximizing your Social Security benefits.
- Tax-loss harvesting on all taxable accounts, regardless of account balance.
- Full Service members have access to a financial advisor, as well as a team of specialists helping with many areas of retirement.
- The platform offers a holistic approach to retirement finances, which is unique among robo-advisors.
United Income Robo-Advisor Cons
- The fee structure of 0.50% on the Self Service is in the middle of the robo-advisor range, which falls between 0.25% and 0.50%. Popular competitors Betterment and Wealthfront charge just 0.25%, with Wealthfront managing the first $10,000 for free. The fee of up to 0.80% on the Full Service is high enough to bump up close to full-service investment management providers.
- The Free Service may be free, but it doesn’t provide much of value.
- The platform doesn’t disclose its investment allocations, or the specific investments that are held in your portfolio.
United Income Robo-Advisor Review Wrap Up
United Income is best suited for retirees who are looking for comprehensive financial services. That includes not just investment management, but also help on the spending side, such as with budgeting and specific expenses, like healthcare.
The fee structure for both the Self Service and Full Service are higher than many robo-advisors, yet remain lower than most human financial and wealth managers. As there are no competitors to the United Income robo-advisor for retirees the fees must be evaluated in light of the extra support you’ll receive in retirement-specific areas of life. It’s be like having a financial advisor who takes care of everything in your retirement life.
If you’d like additional information, or if you’d like to sign up for the service, visit the United Income website.
Kevin Mercadante is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry. He lives in New Hampshire and can be followed on Twitter at @OutOfYourRut.