Updated on Wednesday, October 21, 2020
Financial services company Acorns provides a traditional, automated robo-advisory service, featuring a curated selection of diversified portfolios built with exchange-traded funds (ETFs). Whatâs unique about Acorns is that it invests customersâ spare change through the magic of micro-investing.
This makes Acorns an attractive option for beginners who want a hands-off experience and low costs. Sophisticated investors, however, might want to look elsewhere, as Acorns offers a fairly limited scope of asset classes and doesnât allow for much control over portfolio management.
|Management fee||$1 to $5 per month|
|Accounts offered||Individual brokerage account, Roth IRA, Traditional IRA, SEP IRA, UGMA/UTMA|
|Access to human advisors||No|
Acorns is a financial services company that is best known for its robo-advising platform, which offers automated investment services ranging from micro-investing to full-fledged retirement accounts.
Like many other robo-advisors, upon signing up, Acorns will recommend one of its curated investment portfolios, which are comprised of ETFs and range from conservative to aggressive based on your unique financial needs. Acorns is truly a digital product, as it does not offer access to human financial advisors.
Along with individual brokerage accounts, Acorns also supports a slew of retirement accounts â including Traditional IRAs, Roth IRAs and SEP IRAs â as well as custodial accounts for children and a checking account product.
|Tax loss harvesting|
|Socially Responsible Investing|
Acorns offers five different portfolios made up of a well-diversified mix of ETFs that feature a broad swath of different asset classes, which could include:
Acornsâ five portfolios, which are recommended to you based on your particular financial situation and financial targets, are made up of the following asset classes:
Acorns does not feature any specific tax minimization strategies, such as tax-loss harvesting, which is a noteworthy drawback when compared to its peers. Instead, Acorns recommends speaking with a CPA or tax professional to learn about how taxes may apply to any withdrawals made or dividends or gains earned.
Instead of charging a fee based on a percentage of your account balance, Acorns has a tier-based membership model in which you will be charged a flat, monthly fee dependent on your membership level.
The membership tiers â and what services they include â are as follows:
Lite â $1 per month
Personal â $3 per month
Family â $5 per month
Keep in mind that in addition to your monthly flat fee, you will also be responsible for paying your investmentsâ expense ratios, which are the expenses related to running and managing that particular fund.
Acornsâ signature feature is its Round-Ups tool, which invests your spare change into your Acorns investment account. With Round-Ups, when you make a purchase with your Acorns debit card (or any linked debit card of your choosing), Acorns will round up your purchase to the nearest dollar, and then invest the difference into your investment account.
This feature waits until youâve racked up a minimum of $5 in spare change before investing it. While you wonât get rich using Round-Ups, itâs a useful tool for beginner investors who feel like they donât have the funds to start investing.
Acornsâ Found Money feature is the companyâs iteration of a rewards program. With Found Money, when you make a purchase with your linked debit card at one of Acornsâ partner brands (there are over 300 of them, including big names like Airbnb, Macyâs and Walmart), the brand will invest a set amount or a percentage of your purchase into your Acorns investment account.
Included in its Personal and Family membership tiers is Acorns Later, which features a selection of retirement accounts including Traditional IRAs, Roth IRAs and SEP IRAs. When you sign up for an Acorns Later account, Acorns will recommend which type of IRA is right for you, along with a recommended portfolio. Other tools included in the Acorns Later feature are recurring contributions and the ability to rollover funds from an existing retirement account.
Also included in the mid-tier, Personal membership level as well as the higher Family membership level is Acorns Spend, which serves as a checking account. Acorns Spend comes with a Visa debit card, and includes all the bells and whistles offered by checking accounts at traditional banks, including direct deposit, mobile deposit and FDIC insurance up to the legal limit.
Additionally, Acorns Spend features added benefits, including no overdraft fees and up to 10% in bonus investments from Found Money partners. Itâs worth noting, however, that the funds in your Spend account do not earn interest.
Acorns Early is available through Acornsâ highest membership tier, Acorns Family. With Early, you will have access to a UGMA/UTMA account, which is a custodial investment account for minors. All Early investment accounts are assigned an aggressive portfolio and feature beneficial tools, such as recurring investments and the ability to add multiple kids per family at no extra cost.
Acorns is currently giving free access to Acorns Early to all babies born in 2020.
When it comes to customer support, though, your options are pretty limited â you can only reach out to Acorns via a chat form through its website or by email. For investors who prefer communicating with a support team over the Phone, Acorns may not be the best fit for you.
Acorns provides SIPC protection, meaning up to $500,000 of your invested funds (including $250,000 in cash) are insured in the case that Acorns fails. Meanwhile, Acorns Spend accounts are insured by the FDIC, up to legal limit ($250,000).
Additionally, Acorns uses two-factor authentication to protect your account, and after logging in with your credentials, it requires you to enter a code that you will receive via text message before you can actually access your account. Other measures of security that Acorns provides include SSL encryption and account alerts if unusual account activity is detected.
Overall, Acorns is a solid option for new investors who want to learn the basics of investing without committing a large chunk of cash. Itâs also an attractive option for hands-off investors who are comfortable with investing in just a handful of well-diversified ETFs, and do not feel any desire to mess with the investments in their portfolio or their asset allocations.
However, Acorns is likely not the best fit for sophisticated investors who want to be more involved in building and managing their investment portfolio, as well as investors who want access to a larger swath of asset classes. Additionally, consumers who are wary of a purely digital experience when it comes to their investments may want to steer clear.
|Account minimum||Annual fee||Accounts offered|
|Acorns Invest||$0||$1-$5 per month||Individual brokerage account, Roth IRA, Traditional IRA, SEP IRA, UGMA/UTMA|
|Robinhood||$0||$0||Individual brokerage account|
|SoFi Invest||$1||$0||Individual taxable brokerage account, joint taxable brokerage account, Traditional IRA, Roth IRA, rollover IRA, SEP IRA|
At its core, Acorns and Robinhood are two very different products. While both are investment platforms, Acorns does most of the heavy lifting for the investor â recommending a portfolio, and then automatically investing in a diversified mix of ETFs, rebalancing when necessary.
Meanwhile, with Robinhood, the investor is much more in control. Robinhood is not so much a robo-advisor as it is a trading platform that features commission-free trades. Robinhood does allow you to create a balanced portfolio, but itâs up to the investor to diversify that portfolio by picking their investments and those investmentsâ asset allocations.
Acorns and SoFi Automated Investing share many similarities, with both being geared more toward hands-off investors. Like Acorns, SoFi Automated Investing will curate a portfolio thatâs right for you, automatically diversifying it and rebalancing it when necessary.
However, while Acorns charges for its services via a monthly membership model, SoFi Automated Investing does not charge any management or advisory fees. Additionally, SoFi Automated Investing offers an active investing route â meaning you have the ability to buy and sell stocks on your own â which is a feature that Acorns lacks.
All information included in this profile is accurate as of 10/21/2020. For more information, please consult Acornsâs website.