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Interactive Advisors review 2022

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.

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Interactive Advisors Logo

Best For

  • Portfolio selection
  • Low costs
  • ESG investing

Interactive Advisors offers perhaps the strongest portfolio selection among robo-advisors, and yet somehow balances that with no management fee. The robo-advisor offers a wide range of low-cost portfolios, including a sizable selection of socially responsible funds, most of which have a small investment minimum. While Interactive Advisors excels at the portfolio side of the equation, it’s much weaker on some of the “service” features that make other top robo-advisors stand out, including tax-loss harvesting and useful planning tools, in particular. All in all, this mix of features makes Interactive Advisors a strong but not outstanding player, even with the robo’s excellent portfolio choices. Yet, with the ability to buy fractional shares and a low investment minimum, Interactive Advisors can make an attractive option for beginning investors.

Those looking for dedicated human advisors might want to investigate Betterment or Personal Capital (if you can meet the high minimum). Investors wanting to consolidate accounts with a major financial player may want to investigate robo options such as Fidelity Go, Marcus Invest or J.P. Morgan Automated Investing.

Interactive Advisors at a glance

Star Rating

4
  • Cost: 5 of 5
  • Investments and Portfolios: 5 of 5
  • Account Types: 3 of 5
  • Features and Tools: 3 of 5
  • Customer Experience: 4.5 of 5
  • Account Minimum:
    $100, but some funds have higher minimums, as much as $10,000 or $20,000
  • Management Fee:
    None
  • Portfolio Mix:
    Selection of more than 75 portfolios, which can be mixed and matched
  • Fund Expense Ratio:
    Varies by fund, ranging from 0.08-1.50 percent, but about two-thirds available at low cost
  • Account Types:
    Individual and joint taxable accounts, traditional, Roth and rollover IRAs; For professionals, also supports trusts and advisors
  • Cash Management Account:
    None, though can use a linked Interactive Brokers account for cash management, including debit card
  • Customer service:
    Monday - Friday 9 a.m. - 5 p.m. ET, phone, email, live chat
  • Tax Strategy:
    None
  • Rebalancing:
    Funds are rebalanced at the fund level, but your allocation to them is not rebalanced
  • Tools:
    Goal tracker shows you the probability of reaching your goal, cost calculator
  • Promotion:
    None

Pros: Where Interactive Advisors stands out

No management fee

With so many other positives on offer at Interactive Advisors, it’s a bit hard to believe that the robo-advisor charges no management fees. But there really is no cover charge. Yes, you’ll still have to pay the expense ratios on any investment funds that you select, as you would with any robo-advisor, of course.

This structure means that for all-in costs (management fee plus fund fees) Interactive Advisors is about as competitive on price as any robo-advisor can be. That puts it in stiff competition with Schwab Intelligent Portfolios and SoFi Automated Investing for lowest-cost robo-advisor. That said, Interactive Advisors does not offer the same level of features as other robos (more below).

Low-cost portfolios

As alluded to above, Interactive Advisors offers some very low-cost portfolios, with expense ratios starting at just 0.08 percent, or a cost of about $8 a year for every $10,000 invested. That low fee gets you access to Interactive Advisor’s home-grown thematic funds, though you can add other funds at slightly higher costs. In fact, you can get nearly half of the funds on offer here at a fee of 0.11 percent or less – solid value. If you don’t mind paying a bit more, you’ll be able to snag about two-thirds of the funds here for an expense ratio of 0.20 percent or less.

Then if you’re looking for something a little more custom, you could go as high as 1.5 percent, but you absolutely needn’t do that to enjoy a highly individualized portfolio.

Factor in the total costs of your funds (plus the lack of management fee), and you’re looking at an all-in cost that could easily be half – maybe even a third – of what you’d pay elsewhere.

Portfolio selection

Interactive Advisors also excels at the range of portfolios on offer. You’ll get more than 75 investible funds fitting almost any major portfolio style, and as noted, most of them are low cost.

Here are some of the highlights:

  • A mix of passive and active strategies. Investors can select funds that are only trying to replicate an index or those that are trying to beat the market, or they can mix the two.
  • Low-cost smart beta funds. Some of the robo’s in-house funds use a “smart beta” strategy that tries to achieve higher risk-adjusted returns than the market as a whole. That is, they’re looking for a higher return for every unit of risk assumed. These funds are available in several themes, including quality, growth and dividend stocks.
  • Industry funds. Want exposure to a specific industry? You can get targeted exposure to the major economic sectors.
  • Custom strategies. Funds with higher expense ratios offer more active or advanced strategies, allowing you further choices.
  • Clear performance and risk management. Interactive Advisors provides details on how each fund has performed over the last five years and also offers a measure of the risk-adjusted return, showing you how much risk you’re taking for your return.
  • ESG funds. A strong offering here, but more on this in the next section.

The wide portfolio selection is arguably this robo-advisor’s strongest feature. In fact, probably only Wealthfront offers a wider selection of funds at a robo-advisor.

ESG investing

Interactive Advisors’ investment selections are so strong that it’s worth calling out one of the strongest in its own section: ESG investing. ESG investing – which stands for environmental, social and governance – offers the promise of investing in companies that are making the world a better place, and it’s become tremendously popular in the last few years.

This robo-advisor’s offering might be at the top of the heap, however. You can find ESG funds with investing themes (growth, value, dividends, etc.), or you can fine-tune your selection to specific ESG themes. For example, if you want to emphasize companies that focus on ocean sustainability, you could buy the Ocean Life fund, which invests in firms that have waste management and recycling processes in place to avoid disasters impacting sea life.

Similarly, “mindful business models,” “land health,” “clean air,” “racial equality” and others promise stock exposure reflecting their namesakes. It’s worth noting that these portfolios are all among the cheapest on offer here, too.

Low minimum

You can get started at Interactive Advisors with as little as $100, so it only takes a minimal investment to get going. All the low-cost portfolios – those costing 0.20 percent or less – have this $100 minimum. That’s a boon for beginning investors, though if you want to add a few different funds to your portfolio, you’ll need to meet the $100 minimum on each, which is hardly onerous.

If you want to add some of the pricier funds to your account, you’ll need to cough up $10,000 or more to get started there, though even a few of these allow you to begin with $500.

Don’t let the high account minimums on a few funds deter you from the much wider range of funds offering just that $100 minimum, though. You’ll find plenty to like at the lower price points.

Fractional shares

Interactive Advisors also allows you to get going with fractional shares, meaning you can deposit, say, $125, and have it all invested in the portfolio of your choice. That’s useful for investors who just want to deposit small amounts to get started here, and it’s a feature that’s not always available at other robo-advisors, even some highly regarded ones.

Interactive Advisors also reinvests any dividends or other distributions back into the portfolio using fractional shares, so you won’t have cash sitting in your account unless you want it there.

Linked to Interactive Brokers account

If you have an Interactive Brokers account, you can quickly link your Interactive Advisors account with it. Why is this useful? Among other reasons, it can actually allow you to borrow on margin from your brokerage account to fund your robo-advisor account, if you decide that’s in your interest. Interactive Brokers typically offers the lowest margin rates among online brokers, and margin loans are uncommon among robo-advisors, though Wealthfront offers one, too.

This connection is also valuable because it allows you to use Interactive Brokers as your cash management account. The broker routinely offers the best interest rates on cash balances (though only when rates were at “normal” levels) and offers a debit card, allowing you to spend straight from the account. You’ll also be able to pay bills from the brokerage account. This level of functionality might not be quite up to the level of the top robos, but does offer useful services.

Quick comparison of Robo-Advisor options:
Robo-Advisor Overall Rating Cost Rating Investments and Portfolios
Interactive Advisors logo
5 5 of 5
Fidelity Go review 2022 logo Read Our Review
4.5 3.5 of 5
Ellevest review 2022 logo Read Our Review
4.5 5 of 5
Titan review 2022 logo Read Our Review
3 5 of 5

Cons: Where Interactive Advisors could improve

Limited account types

The available types of accounts at Interactive Advisors are relatively limited: individual and joint taxable accounts, as well as traditional IRAs, Roth IRAs and rollover IRAs. Also available are trust accounts and advisor accounts for advisors building out a portfolio for clients. Beyond that, you’re out of luck. No 529 accounts, no custodial accounts, no SEP IRAs or others.

So Interactive Advisors will work for many clients, but those requiring more specialized accounts will not find what they’re looking for here.

No tax strategy

One of this robo-advisor’s biggest deficits compared to rivals is the fact that it doesn’t have a tax strategy. Top robo-advisors such as Betterment and Wealthfront offer an automated tax-loss harvesting feature that can help reduce your taxable gains. Tax-loss harvesting sells losing investments and records a tax loss that offsets gains elsewhere in your portfolio.

The robo-advisor says that it’s working on tax-loss harvesting for some of its portfolios but it’s not ready for prime time yet.

Limited tools

Unlike many top rivals, Interactive Advisors offers relatively few robust tools for planning your portfolio. Its major feature here is a goal tracker that lets you know the probability of reaching your stated goal, given the information you input. That’s helpful, for sure, but the lack of a wider selection makes Interactive Brokers a less robust planning option than it could be.

Bottom line

Interactive Advisors makes a strong contender for those who can take advantage of its biggest strengths, its wide selection of portfolios:

  • The choice of funds here is among the best in the industry, and the all-in cost is also among the cheapest, too.
  • The detailed ESG portfolios may also attract those who want a specific investing focus rather than a generic fund.
  • However, other investors looking for more features may find something missing, whether that’s tax-loss harvesting, robust tools, a cash management account or something else.

Investors looking to create their own portfolio might want to investigate M1 Finance or even Wealthfront, which offers an enormous selection of funds and the ability to pick what you want. If cost is your only objective, then look at SoFi Automated Investing or even Ellevest.

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