Ally is an online bank that offers managed portfolios so that you can integrate robo-advisor-style investing with your day-to-day banking. This hands-off approach offers both taxable and tax-advantaged accounts, allowing you to incorporate both retirement goals and other savings goals into your overall financial strategy. 

Learn more about how Ally Invest works, how much it costs, and who it’s best for. With so many robo-advisors on the market today, it’s more important than ever to weigh your options before making a choice.

How It Works

Ally Bank has been around as an online bank since 2000, though its earlier roots as a lender date back to the 1920s. Today, anyone can open up a managed portfolio through Ally Invest, which boasts low monthly fees and automatic rebalancing. Ally also offers a self-directed trading platform for those who wish to execute their own investment strategy with individual stocks and other securities.

For those who prefer a hands-off approach to saving and investing, however, Ally Invest’s managed portfolios are the better way to go. Like other robo-advisors, the platform utilizes your personal goals, timeline, and risk tolerance to recommend a balanced portfolio. As market conditions change, automatic rebalancing occurs so that your portfolio is consistently aligned with your goals. You’ll get updates when this happens so you always know what’s going on with your account.

Investment recommendations include a variety of low-cost, diverse ETFs that are based specifically on your goals. Through your online account, you can check-in at any time to see how your portfolio is performing, where your goal progress stands, and review any potential recommendations from Ally Invest. 

Account Types

Ally Invest’s managed portfolios offer a few different account options to choose from to help reach your specific goals.

General Taxable Accounts

For general investments, you have three taxable choices: individual, joint, or custodial accounts. If you don’t want anyone else to have access to your account, choose the individual option. To share the account with a spouse or partner, go for the joint account. To invest on behalf of a minor, Ally also allows you to open a custodial account.

Tax-Advantaged IRAs

Ally Invest offers both traditional and Roth IRAs. Each one comes with a different type of tax benefit. When you contribute to a traditional IRA, you can use your contribution amount as a tax deduction during the contribution year. You’ll then pay taxes on any withdrawals you make later down the road.

You don’t get an immediate tax deduction when you contribute to a Roth IRA, but instead, get to deduct your withdrawals (including your earnings over the years) so you’re not surprised with a high tax bill during retirement. 

A final way to invest in your retirement with Ally is by rolling over an existing IRA. There’s typically no penalty for doing so as long as you follow the correct rollover process rather than withdrawing funds from the previous account and depositing them with Ally. While Ally doesn’t charge a fee for transferring IRA funds into your account, you may be charged by the previous brokerage that held the funds. Confirm those details in advance so you know what to expect in terms of the total cost.

Pricing Model

Management Fees

0.30% 

Account Minimum

$100 

Expect an average expense ratio of 0.80% on top of the management fee from Ally Invest. To accurately gauge how much your management fee amounts to each month, Ally Invest offers a simple calculator tool that lets you adjust a slider to compare what you’ll pay each month based on your assets under management. If you open an IRA and later decide to close it, you’ll incur a $50 account closing fee, although closing a general brokerage account doesn’t incur a fee.

Additional Features

One feature that stands out with Ally Invest is that you have the ability to adjust the recommendations you receive. Your suggested allocations typically include stocks, bonds (both U.S. and foreign), and cash. If you already have a working knowledge of investments and the path you want to take, you can alter the weight of your portfolio to your own preference. 

When you first sign up with Ally Invest, you can also utilize their customizable goal-setting. Your options include preparing for retirement, saving for a major purchase, building wealth, or creating passive income from investments. 

Ally Invest also offers a lot in terms of their research and tools. Many of them are designed for self-directed trading but can still help you keep a pulse on current market conditions no matter how hands-on you like to be with your investments. 

Here are some examples of data you can access as an Ally Invest client.

  • Customizable streaming charts to analyze stock, ETF, and index performance
  • Profit/loss calculator
  • Market data on companies and peer performance

Advantages

One of the major benefits of investing with Ally is that you get 24/7 access to specialists to help with your questions. While this doesn’t cover financial advice, you can call the helpline to troubleshoot any account issues that crop up, day or night. Pick your preferred contact method through either phone, email, or online chat. Ally Invest makes it incredibly easy to get in touch quickly. 

Users also appreciate Ally Invest’s transparency when it comes to pricing. There’s no annual account fee on top of the management fee as some brokerages charge. You also won’t be penalized with an inactivity fee or transfer fees (except for closing an IRA). So no matter how much or how little action your account sees, you won’t be eating into your returns for every little change you make. 

Finally, current Ally bank customers can take advantage of full integration with their other Ally accounts. This allows you to access all of your financial information across devices, from checking and savings, even to home and auto loans. You can log onto Ally on your computer, tablet, or phone for a comprehensive experience. 

Disadvantages

No robo-advisor is perfect and Ally Invest comes with a few drawbacks of its own. The first two are missing features that many other platforms include with their managed portfolios: tax-loss harvesting and fractional shares. 

Tax-loss harvesting is when stocks in your portfolio are automatically sold at a loss in order to minimize your capital gains. Fractional shares let you purchase a portion of a share to maximize the invested money in your account, rather than having leftover cash sitting without growing. Unfortunately, you won’t find either feature from Ally Invest. 

Ally Invest also has a slightly higher management fee compared to some other robo-advisors. On top of that, you won’t find any tiered levels or discounts when you reach a higher balance. That also means you don’t get a higher level of service or extra perks when you reach certain asset milestones, such as $50,000 or $100,000.

You’ll also find a limit on the types of IRAs available. While you can invest through a traditional or Roth IRA, there is no SEP IRA offered for self-employed individuals. Entrepreneurs and business owners can still invest in the other two if they qualify, but you’ll have greater limits on how much you can contribute each year compared to the flexibility gained with a SEP IRA. 

Who It’s Best For

Ally Invest could be ideal for investors with either smaller or larger balances, depending on the type of financial advice you want as you grow your portfolio. Investors with a smaller balance may appreciate the relatively low 0.30% management fee, especially if you’re interested in digging into data on your own.

Larger investors, on the other hand, may feel that the management fee is a bargain since many robo-advisors start to charge a higher management fee of 0.50% or more once your account hits between $50,000 and $100,000. Usually, these upgraded plans come with additional services and advice. 

But if you are comfortable managing your holistic wealth picture on your own and don’t necessarily need additional touchpoints with a human advisor, you may prefer the Ally Invest model. In fact, you could potentially save quite a bit of money if you stick with Ally’s single-tier pricing model compared to multi-tier plans that are offered by competitors.

The Bottom Line

Managed portfolios from Ally Invest are an excellent way to take advantage of a robo-advisor service while creating an integrated approach to your finances, particularly if you bank with Ally or have loan products with them. Plus, your access to a wealth of tools and resources gives you the flexibility to learn as much about markets and general investing as you want, even if you still prefer the extra guidance that comes with a managed portfolio. 

With just a low $100 opening deposit required, Ally Invest makes it as easy as possible to start reaching those long-term financial goals, no matter where you stand today. 

Author

Lauren's work has been seen in a variety of news outlets, including the Chicago Tribune, Crediful, Kiplinger, and CBS News. Before her writing career, Lauren worked in community outreach for the Federal Reserve Bank of Richmond as well as in non-profit fundraising. She lives in the Blue Ridge Mountains with her husband and three kids.

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