Swell Investing Review 2020 – Invest in Progress
Account Minimum: $50 – Fees: 0.75% – Best for: Socially Responsible Investing
Swell? Like the water bottle?
No, but that’s what I thought at first so don’t be too hard on yourself.
TL;DR – Swell is a great investing platform for people who have very specific social causes they want to invest in. The 0.75% annual management fee is pretty high.
What is Swell?
Swell is an investing application built for socially responsible investors. The company operates out of their offices in Santa Monica, CA. Originally a subsidiary of Pacific Life, Swell came on the scene in 2017.
Swell began with a question,
“How can we create a better investment option for people who care about where their money goes and what it supports?”
The answer is: build an application that allows people to invest in causes they care about. There are 7 portfolios for you to choose from (more about that later).
The team at Swell identifies outstanding companies focusing on making a positive future impact and places them in one of the 7 portfolios.
Who created Swell?
Dave Fanger is the CEO of Swell. The company began in 2017. Previously he held jobs for 6 years at Mercer & 6 years at Pacific Life. Swell is a subsidiary of Pacific Life. He says Swell got its start as passion project that Pacific Life always supported and eventually backed.
If you want to hear more from Dave, here is a great Q&A by Cause artist.
What is Socially Responsible Investing?
Socially Responsible Investing (SRI) is a method of investing that considers both financial returns and growth as well as social/environmental good. It is associated with bringing about positive change.
This practice has grown by 107.4% annually since 2012, and is continuing to gain traction with the millennial market as well as younger generations.
Invest your money with Swell.
Swell is unlike a traditional robo-advisor. It’s an app that allows you to invest, but you receive little advice.
Instead, the focus of the app is providing people with the security to know where their money is going and how it is being spent.
Setting up your Swell account is incredibly simple. It’s a three step process:
Step 1: Set up your account: The biggest decision you make here is whether you want a traditional brokerage account or a retirement account (IRA). Signing up is very fast on their easy to use mobile application.
Step 2: Pick your portfolios: This is the trickiest part. You have to choose how much to allocate into each account. Consider your values, but also consider what is profitable. Funny enough those things may not always align.
Step 3: Link your bank account: From here you link your bank account. This allows you to fund your account. You’ll need at least $50 to start. You can also set up auto-deposits so your investing is on auto-pilot.
A closer look at the 7 Swell portfolios.
Impact 400
Performance Since Inception: 4.68%
S&P 500 Performance Since Inception: 5.99%
Basically a green version of the S&P 500. The Impact 400 is Swell’s take on the most impactful companies across all sectors of the stock market. This fund is less than a year old, so it’s really too early to tell how this fund will perform. Portfolio includes Apple, Unilever, Costco, PayPal, Tesla and more.
Disease Eradication
Performance Since Inception: 22.67%
S&P 500 Performance Since Inception: 42.10%
This is a combination of companies that are fighting against major health problems facing our world. A very noble fund, but it massively underperformed the S&P 500. Portfolio includes Celgene Corp, Resmed, Biogen, Amgen and a lot of other companies you probably haven’t heard of.
Clean Water
Performance Since Inception: 41.28%
S&P 500 Performance Since Inception: 42.10%
These companies are conserving, cleaning and streamlining the water resources we have on planet earth. Over the last couple of years this has performed remarkably well in comparison with the S&P 500 benchmark. Portfolio includes A.O. Smith Corp, IDEXX Laboratories, Aqua America, Roper Technologies and more.
Zero Waste
Performance Since Inception: 33.34%
S&P 500 Performance Since Inception: 42.10%
We go through a lot of trash. This portfolio aims to clean up our planet as the demand for recycling continues to grow. Performed 8.76% worse than S&P 500. Portfolio includes Trex Company, Tetra Tech, Donaldson Company, Ingevity Corp and more.
Green Tech
Performance Since Inception: 47.82%
S&P 500 Performance Since Inception: 42.10%
It’s worth noting that this is the only fund Swell has that outperformed the S&P 500. This isn’t to say the other funds won’t over time, but at the end oof the day investing should take into account returns. Outperformed S&P 500 by 5.72% since September, 2016. Portfolio includes Aptiv PLC, ABB LTD, Autodesk Inc, Eaton Corp and more.
Healthy Living
Performance Since Inception: 31.23%
S&P 500 Performance Since Inception: 42.10%
This one is pretty vague as it goes beyond just healthcare and into food, tech, fitness and more. Underperformed the S&P 500 by over 10%. Portfolio includes Lululemon, Unilever, VF Corp, Quest Diagnostics and more.
Healthy Living
Performance Since Inception: 38.91%
S&P 500 Performance Since Inception: 42.10%
Solar panels, wind turbines and other experimental renewable energy resources make up this fund. The mission to use the natural resources we have to power the world. Portfolio includes AECOM, Ametek Inc, Analog Devices Inc and Littlefuse Inc.
Swell for Financial Advisors.
Deep in the footer of the Swell website there is a link that says “For Financial Advisors.” This means that a financial advisor can manage funds with the Swell platform.
What does this mean for a Swell user?
If you are working with a financial advisor and they are using Swell, it is VERY likely that you are paying unnecessary fees.
While they are not transparent about the pricing on their site, in the footer it says “fees may vary for accounts offered through a financial adviser.” Similar to Wealthsimple, this means an advisor may charge an additional fee on top of what you already pay to Swell.
What does this mean for a Financial Advisor?
Are you a financial advisor? Do you have clients who are socially conscious and you don’t know how to approach their investments? If you answered yes to either of those questions, Swell may be just what you are looking for.
Swell comes with an easy to use interface, and a simple set of portfolios for your client to understand. The image above shows the amazing features you have access to with Swell.
What Swell Investing does differently.
With a new financial investing app popping up almost daily, what can we do to distinguish them? If you’re at a loss you aren’t a lone. Let’s take a quick look at how Swell is different.
- Only Socially Responsible – A few apps offer socially responsible investing as a feature. Swell puts SRIs on the main stage, and doesn’t offer any other alternative. This is a unique and admirable thing. It seems like they truly care about helping people give to things they believe in.
- Simple Pricing Structure – It’s just a flat fee of 0.75%. They don’t try to nickle and dime you for other services like a lot of other financial advisors out there. Swell keeps 0.25% cash in each portfolio so you can pay this fee. It is deducted from your account on a monthly basis.
- Unique Company Selection Process – Swell uses a rigorous process too select the companies they place in their funds. First they look at the companies top down business approach to see how they are affecting change. Then they look at the assets impact to make sure revenues are making a measurable impact.
5 reasons we love Swell.
- Customizable Portflio – With Swell you can adjust your portfolio to your liking. They implement automatic rebalancing so you don’t have to deal with the complexities of manually managing any funds.
- Great Design – This isn’t a feature per se, but great design does set a product apart. Swell is beautiful designed and has great typography, hierarchy, illustration and copywriting. It’s well built all around and feels like a premium product.
- Diverse SRI Options – If you want to goo big on Green Tech you can do that with Swell. They make it easy for you to prioritize the initiatives you value. This sets them apart, and makes you feel good about where your money is going.
- Aligns with UN Sustainable Development Goals – The United Nations has 17 criteria that help businesses and governments fight against injustices, inequalities and many other harmful things on this earth. See the full list here.
Swell pricing.
$50 Minimum Account Value. 0.75% Annual Fee.
It’s nice that they keep this number simple. What isn’t nice is the percentage. This is WAY higher than Wealthfront or Betterment. It doesn’t seem like a lot, but over time it really adds up.
Swell is not currently FDIC insured. However, your account is covered by the SIPC. This covers your account in case of broker failure for up to $500,000 in cash and securities, including up to $250,000 in cash.
Where Swell could improve.
- High Management Fees – We touched on this, but let’s hit it home. 0.75% is a lot. This fee is almost on par with a traditional financial advisor. Aren’t robo-advisors supposed to be cheaper?
- Few Features – Swell has no financial advisement options, no real education about what you are investing in, and few account types.
- No Financial Advisors – Platforms like Ellevest are cheaper, and they offer amazing connection to Certified Financial Planners as well as career coaches. Swell should seriously consider something similar if they want to stack up to the competition.
Swell Investing Review: The Bottom Line
If you are passionate about social issues, making a difference with your money and are willing to pay (a lot) for it, then Swell is perfect for you.
On the other hand, if you want to save money on fees and maximize your return on investment this is not the robo-advisor for you.
