If you don't have strong opinions on investment approaches, you'd do best to avoid the more extreme approaches. At the 60/40 risk level, FutureAdvisor makes the heaviest factor bets in the equity market, Covestor tilts hardest to emerging markets and Invessence takes the highest bond risk.
Of the three with more moderate approaches, WiseBanyan works quite well for folks who don't need protection from the taxman.
For folks who need tax management, Wealthfront and Betterment offer a raft of services. Each has its own approach to portfolio construction, tax-loss harvesting, asset location, rebalancing and periodic portfolio updates. I've touched on some of these features in this blog series. No doubt I'll dive back in someday.
In the meantime, I recommend you think hard about the investment exposures you want, the features you value and the costs involved, and choose the firm that fits you.
The Man-Child Chooses
So, what fits my teen, besides his bar mitzvah suit?
At 13, he has no clue about investment philosophies, and he doesn't want to hear about them from his mother. For now, his best bet is to take few bets, and stick with a market-mimicking portfolio. For him, the choice comes down to Betterment, the most marketlike robo advisor; or VT, which replicates the global equity markets.
My teen is too young to take advantage of asset allocation, muni offerings and tax-loss harvesting services, because he has no retirement account, and pays no taxes. Lucky duck.
He's lucky in another way too. He has no real liabilities on the horizon. He doesn't need the ballast of bonds in his portfolio, not yet.
When my son has a job, pays taxes and feels ready to think about investment philosophy, I'll recommend he consider investing with a robo advisor. I'll help him walk through the selection process, identifying his asset allocation preferences, understanding his cost situation and assessing his need for services, so he can choose the one that works best … for him.
Robo advisors offer discipline, reasonable asset allocations and other services that will come in handy once my teen turns into a busy professional. I hope they'll add better tools, like state-specific muni bonds, refined ETF selection and a range of personalized value estimates for tax-loss harvesting, asset location and rebalancing. They have a decade, at least where my son's concerned.
For now, my boy has chosen to invest in VT. Mazel tov on your bar mitzvah, son.
At the time this article was written, the author held no positions in the securities mentioned. Contact Elisabeth Kashner, CFA, at [email protected].