Ally Invest Managed Portfolios review 2021

Bankrate senior reporter James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more.

About our Review Process

Bankrate reviews brokers and robo-advisors based on how well they’re able to help consumers achieve their financial goals. Here's how Bankrate makes money.

Ally Invest Managed Portfolios Logo

Best For

  • Existing Ally customers
  • Cost-conscious investors
  • Beginning investors

Ally seems to offer a financial product for every segment, whether it’s Ally Bank, Ally Invest or now Ally Invest Managed Portfolios. The robo-advisor combines low-cost exchange-traded funds with an option to avoid management fees (though it’s probably a better idea not to skip them.) Low minimums and well-diversified portfolios round out the list of top features, but those looking for the highest-end features – such as a dedicated cash management account and tax-loss harvesting – may want to have a look somewhere else.

Ally’s robo offering is a good entry for existing Ally customers, though others may find it less interesting. Those looking for a more feature-heavy robo-advisor should have a look at Wealthfront, while those needing a human option could also have a look at Betterment, which offers one on its higher-tier service. 

Ally Invest Managed Portfolios at a glance

Star Rating

3.5
  • Cost: 4 of 5
  • Investments and Portfolios: 4.5 of 5
  • Account Types: 4 of 5
  • Features and Tools: 3 of 5
  • Customer Experience: 4 of 5
  • Account Minimum:
    $0 to open an account; $100 to invest
  • Management Fee:
    0 percent for “cash-enhanced” portfolio; 0.3 percent for market-focused portfolio
  • Account fees:
    $50 transfer out fee; $25 IRA closing fee
  • Portfolio Mix:
    17 ETFs
  • Fund Expense Ratio:
    Range for core funds: 0.03 percent - 0.15 percent; Range for socially responsible funds: 0.15 percent - 0.25 percent
  • Account Types:
    Individual and joint taxable; Roth IRA, traditional IRA and rollover IRAs; custodial
  • Cash Management Account:
    Yes, but must open separate account with Ally Bank
  • Customer service:
    24/7 access via phone, chat and email
  • Tax Strategy:
    Tax-optimized portfolio option
  • Rebalancing:
    Yes
  • Tools:
    Goal tracker
  • Promotion:
    None

Pros: Where Ally Invest Managed Portfolios stands out

Well-diversified portfolios

Ally’s robo-advisor lets you take it for a spin even before you create an account, so you can see how it might design a portfolio based on your risk tolerance and time horizon. You can pick a goal you’re saving for and how long you want to be invested. Even before you log in, it will provide you with an expected annual return based on your choices. You’ll have a chance to alter your choices if the portfolio doesn’t feel right. 

Ally’s portfolios are constructed with more than a dozen low-cost ETFs (more below), and they’re a mixture of mostly the same funds with greater or lesser proportions of each depending on your risk tolerance and time horizon. From these funds Ally creates four major kinds of portfolios, and each can be adjusted to be more conservative or more aggressive:

  • Core portfolio – This portfolio has a mixture of stocks and bonds and can form the basis for any long-term portfolio.
  • Income portfolio – This portfolio is focused more on generating income and uses more bonds and more income-producing stock funds.
  • Tax-optimized portfolio – This portfolio adds a municipal bond fund to help minimize the tax hit on taxable portfolios. 
  • Socially responsible portfolio – In place of the typical stock allocations, this portfolio uses socially responsible funds. Bond funds are similar to those of other portfolios. 

Portfolios will often have six to nine funds in them, a mixture of stock and bond funds, depending on risk and time horizon. Perplexingly, though, even a long-term core portfolio with a high risk tolerance will still have a minimal allocation to bonds. While this allocation may be just a few percent, it’s hard to believe that it does much to offset the performance of the stock funds.

Here it’s also worth pointing out Ally’s “cash-enhanced” portfolio option, which is its standard way of constructing a portfolio. This review explains the pros and cons of this plan below. 

No-fee “cash-enhanced” portfolio

If you want to avoid any out-of-pocket advisory fees, then you could opt for Ally’s robo-advisor. But there’s a caveat – you’ll be placed in its “cash-enhanced portfolio,” which means that about 30 percent of your assets will be held in cash at any point in time, with the remainder invested. That cash does earn a competitive interest rate, which would mean more if rates were higher. 

This option gets you a managed portfolio at no additional expense, though you’ll still have to pay for the expense ratios of any funds you have in the portfolio, as you would at any robo-advisor.

But this option presents substantial long-term costs, which are covered in the next section. If reducing the management fee to zero is your primary motivation, then you might also look at SoFi Automated Investing or Schwab Intelligent Portfolios, both of which charge nothing.

Low-cost ETFs 

Ally’s managed portfolios use some of the cheapest ETFs on the market, including from low-cost leaders such as Vanguard and iShares. In this core group of funds, annual expenses range from 0.03 to 0.15 of assets, with many well below 0.10 percent. In real terms, that means you’d expect to pay $3 to $15 per $10,000 invested in each fund. But a weighted average will fall somewhere between these two extremes. So an Ally customer could expect to pay less than 0.10 percent of assets annually, or less than $10 for every $10,000 invested.

That said, if you want to choose the socially responsible portfolio option, your costs will jump. The funds used there range from 0.15 to 0.25 percent, or about $15 to $25 annually for every $10,000 invested. That’s still reasonably cheap in the grand scheme, just not at the rock bottom.

So Ally offers a solid selection of low-cost funds that is competitive with anyone.

Integration with Ally

One of the benefits of going with a more integrated financial company such as Ally is that you can do so much under one roof. You can open a bank account, a self-directed investment account, a managed portfolio and more. That integration also allows you to transfer money quickly and generally keep your eye on all your finances in one comprehensive dashboard. 

So current customers of Ally may find its managed portfolios option a bit more interesting. 

Low account minimums

Ally has a low account minimum to open your account – zero – and it takes just $100 to actually begin investing with the managed portfolio. So new investors can get started quickly and then add a modest amount of funds to actually begin investing. 

Quick comparison of Robo-Advisor options:
Robo-Advisor Overall Rating Cost Rating Investments and Portfolios
Ally Invest Managed Portfolios logo
4 4.5 of 5
Betterment review 2021 logo Read Our Review
5 5 of 5
Wealthfront review 2021 logo Read Our Review
5 5 of 5
Ellevest review 2021 logo Read Our Review
4.5 5 of 5

Cons: Where Ally Invest Managed Portfolios could improve

Portfolio construction and fees

While Ally advertises a “no fee” managed portfolio, the situation is more complicated than that. The no-fee rate applies to what Ally calls its “cash-enhanced portfolios.” Here’s what that means in practical terms: Any cash-enhanced portfolio will have about 30 percent of its assets in cash at any point in time. That has a huge negative effect on your long-term returns, even if you are receiving some interest on that cash. 

If you want to have all your cash invested – that is the point of holding it in an investment account – then you’ll need to opt for what Ally calls its “market-focused portfolio.” It invests about 98 percent of your funds and leaves the remainder as a cushion. For this option, you’ll pay 0.3 percent of your assets annually, or about $30 for every $10,000 invested. 

Cash is ok to have on hand in an investment portfolio if you have pressing needs, especially in the next year. It’s not appropriate for anyone investing for the long term. By having that enormous cash balance, you’ll likely lose tons of gains that you could otherwise have made. And that’s all to save an advisory fee of 0.30 percent, which is only slightly above-average.

So it seems to make little financial sense to go with the cash-enhanced option, which is not an “enhancement” at all. 

No dedicated cash management account

Ally does not offer a dedicated cash management account, unlike many other robo-advisors. 

A dedicated cash management account is a core feature at top robos Wealthfront and Betterment and even middle-tier offerings from Stash and Acorns. In fact, the top players offer their accounts at no cost, meaning you get a ton of great features (interest-bearing account, debit card, no-fee ATMs and more) and you don’t even need to use the investing account. 

Ally receives demerits for this missing feature, though perhaps it’s not as drastic as it would be at another robo-advisor. That’s because you can easily open a bank account through Ally Bank, and take advantage of many of the same features (interest on your account, fee-free ATMs, debit cards and no monthly fee) as you would at another robo’s cash account.

No tax-loss harvesting

Compared to some other top robo-advisors, Ally’s robo offering is missing some key features that would put it near the top of the field, in particular automated tax-loss harvesting, a feature that can add some extra juice to your portfolio.

With automated tax-loss harvesting, a robo-advisor will sell money-losing investments and “harvest” those losses, which can be used to offset gains elsewhere. It’s a useful feature that minimizes your tax bill today and can even save you on future taxes, too. 

Bottom line

Ally Invest Managed Portfolios is a good option for existing Ally customers since they can take advantage of the “one-stop” nature of having their accounts with Ally. While Ally advertises an account with no advisory fees, investors focused on long-term investing will likely do much better with their paid option even if it costs more money each year.

If keeping costs low is your primary objective, both Schwab Intelligent Portfolios and SoFi Automated Investing may be good choices. But robo-advisors with robust tax-loss harvesting plans such as Wealthfront and Betterment may earn you the management fee back and more. 

How we make money

Bankrate is an independent, advertising-supported publisher and comparison service. Bankrate is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. Bankrate does not include all companies or all available products.