WiseBanyan Review 2020 – A “Free” Financial Advisor
Account Minimum: $1 – Fees: $0 – Best for: Beginner Investors
WiseBayan is another robo-advisor that promises zero fees. They say they are “the world’s first free financial advisor.” Technically this is true, but the costs add up if you do some research.
TL;DR – WiseBanyan offers a great free investment account perfect for goal-oriented investors. If you are looking for a basic portfolio management software this is the solution for you. Plan on keeping your money in the same place for a long time, as you pay a fee to close any accounts.
What is WiseBanyan?
WiseBanyan is an online financial advisor. They offer a free investment account, tools to set goals for your financial future and have no fees for the individual investment account. This is very rare for robo-advisors.
There are limitations to what you can do with a WiseBanyan account. Right now they offer individual taxable accounts as well as traditional, ROTH & SEP IRAs. Other types of accounts are not available through WiseBanyan, which limits your investment strategy if you are looking to do a joint account or build funds for your children.
Who created WiseBanyan?
Herbert Moore and Vicki Zhou started WiseBaynan together in 2013. They came from a background of wealth management and wanted to make these tools more accessible to everyone, not just the super rich.
Before starting WiseBanyan both Vicki and Herbert worked together at Archipelago Capital Management, a privately-held investment advisor in New York City. Prior to this Vicki was at Citibank and Herbert worked at a couple of different wealth management companies.
Axos Financial, the parent company of Axos bank in San Diego, CA acquired WiseBanyan in late October of 2018.
Set goals and invest with milestones.
Every robo-advisor does something to be different. WiseBanyan created a way for people to save with plans for the future in mind. They call these Milestones.
What is a Milestone?
Savings milestones are not a new concept. Wealthfront has a robust set of features that let you save for pretty much any goal you can think of. WiseBanyan has 4 types of milestones.
Rainy Day – Life happens to everyone. You break an arm, get in an accident, have to get that weird mole checked out. That’s the way it is. It’s recommended that you have 3 – 6 months of expenses saved up, and the rainy day milestone helps you plan for that.
Retirement – We all stop working eventually, and when this happens you want to be ready to live comfortably without worrying about food, travel or medical expenses. With the retirement milestone you can set up a traditional, ROTH or SEP individual retirement account. Start planning for the future today!
Build Wealth – For the hoarders out there, you can just save your money indefinitely and watch it grow. Sounds fun. This is something to do after the Rainy Day and Retirement funds are already up and running.
Custom – Planning for a dream vacation? Saving up for a new car or house? Custom milestones let you set custom dates and savings goals so you can set aside money in a way that works for you.
Something to keep in mind is that you are only allowed one of each fund at a time, so maybe cool it with the vacations.
WiseBanyan Investment Strategy
There is a section of the WiseBanyan site that discusses their investment strategy, but the explanation is not very clear. They have 3 main ideas behind their investing strategy:
- Time Horizon (how long will you be investing)
- Risk Aversion (can you lose money and not back out)
- Money Saved (how much do you have and plan to save)
With this information they invest using the Modern Portfolio Theory. A lot of robo-advisors and other investment software will say they have this innovative approach to investing. When you strip away all of the fluff, it is usually just the Modern Portfolio Theory.
Pricing – There are Definitely Hidden Fees
If you are only looking for an individual account with no fees and limited features WiseBanyan is truly free. However there are a few fees you should know about before you jump int investing with them.
Customize Your Portfolio
Companies like M1 Finance offer you a lot of control over your portfolio. With WiseBanyan, this service costs an additional $3 per month. If you paid this over the course of 40 years it would add up to $1,440!
Same Day Deposits
They like to call it “Fast Money” but really it gives you same day deposits, a deposit scheduler and overdraft fees. These services are becoming more and more common, but this service costs an additional $2 per month, adding up too $960 over the course of 40 years.
Tax Loss Harvesting
A strategy to offset your income/investment gains. Put very simply, it looks at the losses from your investments and subtracts them from your income in order to reduce the amount of taxes you have to pay. This service is available for an annual fee of 0.25%. Funny enough, Wealthfront offers this service for free to all of their customers (though they do have a 0.25% management fee).
Although WiseBanyan says their accounts are free, you need to spend $5 a month plus 0.25% annually to have a lot of the features other robo-advisors enjoy for one flat rate.
Other fees
In addition to everything about, there are a few other fees WiseBanyan users need to know about. Their parent company Apex has its own set of rules and fees, so be sure to double check their fee structure.
To close your account, they charge a $10 fee plus the $75 transfer fee from Apex.
5 reasons we love WiseBanyan.
- Free Investment Account– We pointed out extra fees and services above, but the investment account is completely free. This is uncommon for robo-advisors and a great feature.
- No Account Minimum – They say you need $1 to invest, so technically there is a minimum. This number is so low though that anyone can get started investing today!
- Milestones – You can set a variety of different goals and track your progress. You can easily auto-deposit funds into each of these milestones and adjust what you want the goal to be at any time. The amount put into each can be set and automated as well.
- Partner Feature – Work towards your goals with someone else. If you both have a WiseBayan account your assets and contributions will be added up to calculate the timeline for your shared milestone. This is an awesome feature for couples.
Where WiseBanyan could improve.
- IRA Fees – Almost every other robo-advisor lumps IRAs in under the same fee structure as individual accounts. With WiseBanyan you have to pay extra fees to have an IRA.
- No Municipal Bonds – Wealthier investors use municipal bonds as the interest paid on them is usually tax free. There are no municipal bonds available on this platform.
- Limited Features – When using the truly free service, there are very limited features. Every other service can be added on for a price, but these fees add up fast. If you have a very particular set of needs it may make sense to use this platform, but if you want a more general offering another robo-advisor like Betterment might make sense.
- Lack of Transparency – It is misleading to say they are the world’s first “free” financial advisor. while technically true, when you start adding on features other accounts normally have it costs about the same as anyone else. You have to dig on their website to figure out what the fees actually are.
WiseBanyan Review: The Bottom Line
At first glance, WiseBanyan seems like a great alternative to a financial advisor with a no-fee taxable account. When you look deeper you realize that they have a lot of hidden fees, just like the human financial advisors we are so used to dealing with.
