We serve as a fiduciary, which means we put your financial interests ahead of ours. Our portfolio management service automatically monitors, rebalances, and tax-manages your current investments, adding low-fee index funds where necessary to bolster your portfolio. If your accounts are already with Fidelity or TD Ameritrade, we're simply a management layer you add over your existing accounts. If your accounts are elsewhere, we do the paperwork to consolidate them at Fidelity or TD Ameritrade as part of FutureAdvisor's services.
What is FutureAdvisor's investment philosophy and methodology?
We take academically researched portfolio management principles and industry best practices and apply them to your situation and your existing investment accounts. We use the funds you already own whenever possible, to minimize churn and minimize tax impact. When necessary, we add low cost index funds to better diversify the portfolio. You can read more details about our methodology.
What are ETFs?
Exchange traded funds (ETFs) are similar to index mutual funds. ETFs are bought and sold like stocks and usually have a lower expense ratio than the equivalent mutual fund.
How It Works: Signing Up
Who is behind FutureAdvisor?
FutureAdvisor is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). We have a fiduciary duty to our clients, putting their best financial interests ahead of ours. We are a team of finance professionals, data scientists, and software engineers backed by BlackRock. FutureAdvisor is at the leading edge of a shift in financial services towards transparency and affordability. Learn more about.
What types of accounts are supported? Are you able to manage my 401(k)?
We currently offer Direct Management for Traditional, Roth, Rollover, and SEP IRAs, as well as individual and joint taxable accounts. Direct Management means you grant FutureAdvisor the authority to trade in the account on your behalf. We can help you rollover your 401(k) if you no longer work at your employer. However, we do not manage 401(k) accounts if you are still at your employer and contributing to them.
I don't have an investment account, can I still join?
Yes, we can help you open Traditional IRA, Roth IRA, and taxable accounts for you. Simply let us know and we will help you get started.
Do I have to sell or liquidate my investments to have FutureAdvisor manage them?
No. We manage your accounts the way they are today. If your accounts are already with Fidelity or TD Ameritrade, we're simply a management layer you add over your existing accounts. If your accounts are elsewhere we do the paperwork to consolidate them at Fidelity or TD Ameritrade as part of FutureAdvisor's services. We always strive to minimize capital gains and stringently follow our-- see "Taxes" below for more.
Who is eligible to use FutureAdvisor?
To enroll in FutureAdvisor, you must be a legal US resident, between 18 and 68 years of age, have at least $10,000 in investable assets, and you must have a valid Social Security Number or Tax Identification Number.
Why do I have to transfer my assets to Fidelity Investments or TD Ameritrade for FutureAdvisor's managed service?
We have an agreement with two industry-leading brokerages, Fidelity Investments and TD Ameritrade, to assume custody of your accounts and to enable us to trade in your accounts. Both brokerages are SIPC insured and offer robust lineups of low-fee and commission-free ETFs that we use to balance your portfolio.
For tax sheltered accounts with less than $10,000, we help you liquidate existing investments before transfer to minimize trading fees. For tax sheltered accounts with more than $10,000, and when possible, we help you transfer the holdings as they are, to minimize the amount of time your cash is out of the market. Taxable accounts are always transferred as-is, which enables us to conduct a detailed analysis of the tax lot information for each holding before considering a sale. See the "Taxes" section below for more information about how we strive to minimize tax impact during trading.
How It Works: Day-to-Day
Who is actually managing my portfolio on a day-to-day basis?
Portfolio monitoring is done in combination by our software Recommendations Engine and human investment team.
Will I be given a preview of my initial rebalance trades? What about subsequent rebalance trades?
Because the initial rebalance can significantly change your portfolio, we send a preview email two days in advance. The email provides details on the improvements we intend for your portfolio, allowing you access to our list of prospective trades.
Thereafter, we will only notify you when a rebalance is complete, as subsequent rebalancing serves to fine-tune your initial allocation.
When do you rebalance?
Following the initial rebalance, we continuously monitor your portfolio. When your assets drift outside their target allocation, or when life alters your investment profile, risk tolerance, or retirement plan, we're standing guard, ready to rebalance your accounts in an instant. On average, a portfolio is rebalanced four to six times per year.
Can I override your investment decisions?
Usually not, though we do allow clients to "lock" individual stock holdings they want to keep provided they're a relatively small portion of the overall portfolio. As your investment advisor we take responsibility for the overall suitability of your portfolio, and as such we're unable to make adjustments to suit each investor's take on the market.
How do I access my managed accounts?
Once FutureAdvisor enrolls your accounts into management, you can access your account anytime through either FutureAdvisor's website or through the brokerage website of Fidelity or TD Ameritrade as you normally would any investment account.
How do I add money to my managed accounts?
You can link your bank account to your managed accounts held at either Fidelity or TD Ameritrade in order to make one-time or recurring deposits. If you are a managed user, you can get started by reading the instructions at the bottom of your Account Settings page. The deposit will be automatically invested within 2 business days, although we wait until you have $500 or more in cash per account before we invest.
How do I withdraw from my managed accounts?
To make a withdrawal from one of your managed accounts, log in and click "Request a Withdrawal" from your dashboard. The funds will be available for removal from your account after 4 business days.
We're here to help if you have questions about which account to withdraw from! Our phone and email contact information can be found on your Account Settings page.
Can I transfer money to or from a third party account?
FutureAdvisor is unable to verify or facilitate third party money movement in or out of managed accounts, including wires, ACH, EFT, check, ACAT, or any other means.
Third party money movement is defined as a transfer of cash or securities between accounts with different account owner(s). This could include moving money from your account to a joint account you have with your spouse, or moving money to an escrow account for the purposes of buying a home, for example.
We do facilitate first party money movement requests between accounts with the same owner(s), after which you can transfer to or from as needed at an outside institution. Please leave ample time for processing between institutions and for verification windows.
If you expect to require cash or securities to move between accounts not registered in the same name as your managed account(s), please reach out to our service team at (800) 975-7199, as we may need to cancel your account.”
What are the funds FutureAdvisor uses to balance my portfolio?
FutureAdvisor utilizes the funds you already own whenever possible to minimize churn and tax impact. When necessary, we'll add low-fee index funds to your portfolio to achieve specific diversification goals. Here's a sample set of funds that we use to round out your portfolio:
At TD Ameritrade Symbol Fund Name Expense Ratio VB Vanguard Small-Cap Index Fund 0.08% VTV Vanguard Value Index Fund 0.08% VTI Vanguard Total Stock Market Index Fund 0.05% VSS Vanguard FTSE All-World ex-US Small-Cap Index Fund 0.17% EFV iShares MSCI EAFE Value ETF 0.40% VEA Vanguard Tax-Managed International Fund 0.09% VWO Vanguard Emerging Markets Stock Index Fund 0.15% VNQ Vanguard REIT Index Fund 0.12% RWX SPDR Dow Jones International Real Estate ETF 0.59% AGG iShares Core US Aggregate Bond ETF 0.05% STPZ PIMCO 1-5 Year US TIPS Index Exchange-Traded Fund 0.20% BWX SPDR Barclays International Treasury Bond ETF 0.50% At Fidelity Investments Symbol Fund Name Expense Ratio IJR iShares Core S&P Small-Cap ETF 0.07% IVE iShares S&P 500 Value ETF 0.18% IVV iShares Core S&P 500 ETF 0.04% SCZ iShares MSCI EAFE Small-Cap ETF 0.40% EFV iShares MSCI EAFE Value ETF 0.40% IEFA iShares Core MSCI EAFE ETF 0.08% IEMG iShares Core MSCI Emerging Markets ETF 0.14% VNQ Vanguard REIT Index Fund 0.12% VNQI Vanguard Global ex-US Real Estate Index Fund 0.18% AGG iShares Core US Aggregate Bond ETF 0.05% STIP iShares 0-5 Year TIPS Bond ETF 0.10% IGOV iShares International Treasury Bond ETF 0.35%
Expense ratios current as of October 6, 2016
*Any discussion of specific securities is intended to help clients understand our investment management style, and should not be regarded as a recommendation of any security for any person. Information concerning the performance of our managed accounts generally or our recommendations over the last year is available on request. You should not assume that future recommendations will be as profitable or will equal the performance of past recommendations. iShares ETFs are affiliated products of BlackRock, which owns FutureAdvisor.
What kinds of reporting will I get as a client?
You can sign in to FutureAdvisor at any time to get a comprehensive dashboard showing your portfolio's past performance under our management, a timeline of all actions we've ever taken to improve your portfolio, and account-by-account portfolio holdings. In addition, the dashboard will display the health of the overall portfolio in terms of performance, fees, tax efficiency, and diversification.
The custodian institution, either Fidelity or TD Ameritrade, will also send you regular statements about your accounts, in addition to end-of-year tax documents.
Where do I access account statements and tax documents?
During the Premium enrollment process we will help you establish a Fidelity or TD Ameritrade online profile if you do not have one already. You will be able to use this profile to access account statements and tax documents.
What is householding? Does FutureAdvisor do this?
Yes, we can do householding. Householding is when multiple accounts are managed under one FutureAdvisor profile towards one investment goal. Householding lets us use all of your accounts towards your goal. We do this for many clients who have multiple accounts with the same investment objective and the same number of years until retirement.
What are the pros and cons of householding with a partner?
Depending on your situation, householding can be a great option for you. Some factors to consider include:
More efficient investing
Depending on your assets and how you file taxes, householding can help you invest more efficiently. For instance, we don’t buy fractional shares and with many fund share prices greater than $100/share, a larger pool of assets can make it easier to diversify your portfolio.
Better insight into your investments
When you household with us, all accounts are in one place. Our dashboard allows you to see performance of these accounts as one portfolio. This can make it easier to see how your investments are doing together.
One risk tolerance and investment horizon
In order to use householding, your accounts must share the same risk tolerance and investment time horizon (determined by years to retirement). If you and your partner don’t share the same comfort with risk and/or time until retirement, householding may not be right for you.
Asymmetrical asset placement
In householding, we use all your accounts to work toward a single investment objective. We take into account all of your household’s account types to determine where certain asset classes will be placed. Because each account can have very different assets, their performances can differ.
What could that look like? Let’s say you and your partner have two accounts. Your partner has a tax-deferred Traditional IRA while you have a taxable account. We may put assets like high-dividend-paying ETFs in your partner’s Traditional IRA to shield your dividend income from taxes as it grows. This could mean placing ETFs with potential for higher growth and risk in your taxable account. Since each account will have different asset classes, performance could vary. However, both are being managed together towards one goal and one investment objective.
If you’d like to keep your logins, passwords, and assets private from your partner, householding may not be for you. Why? For households with partners, one partner is identified as the primary. Only the primary partner has a username and password to view and access the householded accounts on our site. We also use the primary partner’s email address to communicate with your entire household.
If you choose to household, the secondary partner has to share personal information with the primary and rely on them to share information and correspondence relating to the householded accounts.
Termination of householding
If you’re in a relationship and decide to separate your accounts, this can require rebalancing of accounts and one partner to re-enroll to continue with our service. Because you were under one account, the partner that leaves will need to re-enroll in FutureAdvisor to continue having their accounts managed.
Keep in mind, because these accounts had one goal, they may have had significantly different performance because the full asset allocation was spread across multiple accounts. After terminating, trading activity may be necessary for both of you to rebalance accounts.
While householding can be a great option, it isn’t for everyone. To see if it’s right for you, please consult with a licensed financial advisor.
What are the tax implications of signing up for FutureAdvisor?
The vast majority of clients do not incur any tax impact in enrolling in FutureAdvisor. Once enrolled, every time we rebalance we will adhere to our Capital Gains and Tax Policy, which minimizes tax impact.
FutureAdvisor follows a stringent capital gains and tax policy in managing your taxable investments. When you enroll in our Managed Service, you will see an analysis of the tax impact before your first portfolio rebalancing. In most cases, our portfolio rebalancing algorithm is designed to limit realized short-term capital gains to the greater of $200 or 5% of the position value. Exceptions may be made in certain circumstances, including liquidating a position to avoid fund fees or future transaction costs, and in order to meet cash targets such as strategic cash allocations or client instructions to hold or increase cash. With respect to long-term gains, the service will balance a variety of factors within the portfolio to determine optimal treatment, considering your years to goal, portfolio size, cash needs, and the potential diversification impact of a given set of transactions. Rebalancing a portfolio may cause investors to incur tax liabilities. References to tax strategies that FutureAdvisor considers in managing accounts should not be confused with tax advice. FutureAdvisor does not provide tax advice. Clients should consult with their personal tax advisors regarding the tax consequences of investing.
How does automated tax loss harvesting work & how much will I save?
Research shows that automated tax loss harvesting would save an estimated $6,057 per year over 20 years for a $200,000 initial investment (see methodology). We do this by continually monitoring each of your holdings and looking for positions with at least $500 and 1.5% in harvestable losses given current market prices. For these, we swap tax lots with losses with a preselected similar index fund of the same asset class. In this way, we bank the losses for tax purposes without changing the portfolio. At the end of the year we're able to use that loss to offset your gains for the year and/or ordinary income. Our algorithm also ensures that we do not incur wash sales in this process.
How does FutureAdvisor manage my assets in a tax-conscious manner?
References to tax strategies that FutureAdvisor considers in managing accounts should not be confused with tax advice. FutureAdvisor does not provide tax advice. Clients should consult with their personal tax advisors regarding the tax consequences of investing.
How much does FutureAdvisor cost?
We charge a flat annual management fee of 0.5% of assets directly managed. This means that assets we don't directly trade in, such as your current employer 401(k), are not included for billing purposes.
Our 0.5% management fee is billed as quarterly installments of 0.125% of assets directly managed. The billing cycle begins in the month following your initial rebalance, and we deduct the fee from non-tax sheltered accounts whenever possible.
Will I incur trading commissions or other fees, especially during rebalancing?
You may incur some trading commissions during your portfolio's initial rebalance, as we divest some of your existing holdings to bring your portfolio into balance. Trading commissions are usually $0 for every subsequent rebalance, as we use commission-free ETFs almost exclusively.
In rebalancing, we take transaction fees into consideration and only choose to incur them if the projected benefits outweigh the costs. At TD Ameritrade, these are $9.99 per stock/ETF trade and a maximum of $24.00 per mutual fund trade, depending on the fund. At Fidelity Investments, these are $7.95 per stock/ETF trade and a maximum of $50 per mutual fund trade, depending on the fund.
For tax-loss harvesting, FutureAdvisor may incur the per-ETF trading commission of $7.95 or $9.99, but only when the calculated tax savings more than offset trading commissions.
Will my current brokerage charge me account closing and/or transfer out fees?
It depends on which brokerage you utilize prior to signing up for Premium. If your accounts are already held at Fidelity or TD Ameritrade, or are being transferred from Vanguard, these fees will not apply. Most other brokerages and mutual fund companies charge fees ranging from $50 to $100 per account to transfer. Check with your current brokerage for details.
Will I be charged account opening or account maintenance fees?
No, you will not. Fidelity and TD Ameritrade do not charge account opening fees or account maintenance fees on institutional accounts, the kind used by FutureAdvisor.
Can I do it myself?
Yes you can. Simply sign up for FutureAdvisor for free and you'll get personalized account-by-account recommendations for your portfolio. For free, you can use this service indefinitely. Just contact your brokerage to enact the recommended trades.