Marcus Invest review 2023
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Marcus Invest: Best for
- Current Marcus customers
- Beginning investors
- Smart Beta and impact portfolios
Marcus Invest brings a cost-competitive robo-advisor to a crowded field of rivals, with some polished features such as multiple portfolio types — including socially responsible and smart beta — that are less common. While Marcus does the core functions such as portfolio management and rebalancing, it misses key features of more premium services such as tax-loss harvesting and other investment planning tools. Marcus Invest will work well for current Marcus customers, however, if they’re looking to expand from a banking or other relationship or want a way to keep their finances all under one digital roof.
Those looking for a more sophisticated experience or who have greater needs should check out Wealthfront and Schwab Intelligent Portfolios. Also worth a look is Betterment, which took Bankrate’s top honors for best robo-advisor in 2023 for a host of reasons.
Marcus Invest: In the details
Pros: Where Marcus Invest stands out
Marcus Invest provides three broad types of portfolios, each of which can be adjusted based on your risk tolerance and investing time horizon:
- Core: Uses index funds to invest in a mix of asset classes in major markets, including internationally
- Impact: Similar to the Core portfolio but with some extra flavor of ESG (environment, social and governance) investing, though not all funds here will be ESG-focused
- Smart Beta: Uses certain investment factors (such as valuation or quality) to try to modestly outperform the market, perhaps with lower volatility or risk
The Smart Beta option is a notable standout as a portfolio choice since few robo-advisors offer it. But it’s worth pointing out that the Smart Beta portfolio uses funds from Goldman Sachs, owner of Marcus. So there’s an inherent conflict of interest here, one that some other robo-advisors also have when they recommend their own funds.
When you open your account, you’ll run through a few quick questions about how long you want to be invested and how you would respond if the market falls. These are used to judge your time horizon and risk tolerance, and thus your allocations to stock funds (riskier and better for long-term investors) and bond funds (safer and better over shorter periods of time.)
If you don’t like the fund allocations that have been selected for the portfolio, you can adjust your answers to these questions later and receive a different allocation.
Each ETF you buy will charge an expense ratio, a fee that’s seamlessly deducted from your account. This fee structure is the same at any robo-advisor, but it’s an additional cost. Marcus helpfully lays out the average range of the costs you could pay for each of its strategies:
- Core: 0.05 – 0.16 percent
- Impact: 0.11 – 0.19 percent
- Smart Beta: 0.15 – 0.17 percent
Why the variation of costs within each strategy? It depends on the mix of funds chosen – some of which are more expensive than others – and based on your time horizon and risk tolerance.
The average expense ratios fall a bit above the range of ETFs offered at other robo-advisors. The difference may amount to a few dollars for every $10,000 invested, so it’s not much. And you could well end up paying less at Marcus, depending on which exact mix of funds you’re in.
Marcus Invest charges an annual management fee of 0.25 percent of invested assets, right in line with what might be called the standard rate offered by robos such as Wealthfront and Betterment. In dollar terms, Marcus would charge $25 annually for each $10,000 you have invested in the account.
But remember that investors at robo-advisors generally have to pay the ETF’s expense ratios on top of the management fee. So once you factor in those costs, all-in fees at many robos might come closer to 0.35 percent or run over that level, depending on the exact funds being purchased.
ETF fees are lumped on top of the management fee at Marcus, too, increasing the costs. If you choose the Smart Beta portfolio option, then Marcus parent Goldman Sachs collects those fund fees, creating a conflict of interest and an incentive to steer you to these funds. Several other robo-advisors direct clients to their in-house funds.
If cost is your only consideration, then it may be worthwhile to have a look at SoFi Automated Investing, which does not charge a management fee.
Marcus reduced its account minimum from $1,000 to $0, in line with most rivals, and you can get started investing with as little as $5. And if you want to open an account at Marcus and have a look around before you plunk down your money, you can easily skip through the deposit step during the sign-up process.
Marcus Invest offers automatic rebalancing on its portfolio, which is something of a standard feature in robo-advisors these days. With rebalancing, a robo-advisor moves your portfolio back to its target allocations when it runs too far away from them, due perhaps to one asset growing faster than others. Basically, it brings your portfolio back to its originally intended alignment.
At Marcus, investment professionals set the maximum “drift” the account can experience before it needs a realignment. While the robo algorithm alerts the team about a rebalance and what trades could be made, it’s the human advisors who review those trades and approve them. In certain situations – say, during volatile markets – these pros can delay or override rebalancing.
Marcus also thinks about taxes in this rebalancing process, selling the funds with the least tax impact first, in order to minimize taxes. However, it’s not clear if and how the robo-advisor factors in new money coming into the account as a means to rebalancing – and therefore, avoiding all tax implications – as an alternative to actually selling funds.
Clean layout, easy to navigate
The Marcus Invest dashboard is cleanly laid out, and you’ll be able to navigate from it to the relatively few other sections on the site (or app). There you’ll see your balance, and can link to your target portfolio, including all the funds that you’re buying. Each ETF also links out cleanly to the prospectus, so you can see the costs for each investment and other relevant information.
The dashboard also gives you projected performance data over time and across three scenarios, so you can gauge how large your portfolio might grow in any given year in the future. A “deposit impact” tool shows you what effect adding money will have on your total wealth over time, a useful visual to show the power of compounding and a handy reminder to add money.
The dashboard also provides you with performance details, so you can understand just how well your portfolio is doing. And that’s about where the tools at Marcus Invest end.
Cons: Where Marcus Invest could improve
Marcus really lacks an offering of tools to help you understand your financial decisions and give you a holistic picture of your finances. Yes, it does provide some basic visuals to help you see how your portfolio might perform over time and the effect of adding money to your portfolio. You can also access basic financial calculators, such as an interest calculator. In addition, the Marcus Insights app can pull together all your accounts to track spending, saving and investing, though you don’t need to be investing your money with Marcus to use it.
In contrast, some of the top robos offer tons of tools and educational elements to help you plan your financial journey and see the impacts of your decisions. Ellevest, Personal Capital and Wealthfront are standouts here.
No human advisor option
If you need a human advisor, Marcus Invest is probably not for you. There’s not even an option to add one for an extra fee. If human advice is necessary, you can hire an outside advisor to help you or go with another robo-advisor that does offer that service.
Betterment offers this access for an additional fee, while Schwab Intelligent Portfolios rolls unlimited access to advisors into its all-in monthly fee. Ellevest also offers access to advisors on an à la carte basis, while SoFi Automated Investing provides some access, too.
The account types are somewhat limited but you may still find what you need:
- Individual taxable accounts
- Joint taxable accounts
- Traditional and Roth IRAs
- SEP IRAs
This range will cover a lot of needs but certainly not all of them, so if you need something besides what’s on the list, you will have to turn elsewhere.
It’s a bit disappointing to see that Marcus Invest doesn’t offer tax-loss harvesting, though that still remains something of a premium feature in the robo space. With tax-loss harvesting, a robo-advisor constantly monitors your portfolio for losing investments and then sells them to gain a tax break. Then it buys a similar fund so that you remain appropriately invested.
Instead, Marcus offers a really basic tax approach here: When it’s time to sell a fund, for example, during rebalancing, it sells the funds with the least negative tax impact. That means it would sell a fund with a low capital gain before one with a higher gain. It’s a simple, straightforward approach and really the minimum that a robo-advisor should offer.