Axos Invest Review 2019

27 Nov

3:48

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Rebecca Lake

Rebecca Lake has been writing about personal finance and business for nearly a decade In addition to covering credit cards and investing for U S News she's a regular contributor to CreditCards com and The Balance She's also worked with a number of banking and financial brands including Citibank Discover

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Rebecca Lake

Axos Invest — formerly known as WiseBanyan — calls itself “the world’s first free financial advisor.” Whether it was first is open to interpretation; however, it’s true that this robo-advisor charges no fees for its most basic investing package. Axos Invest does charge fees for additional functionality beyond the basics, however, such as tax loss harvesting and premium portfolio options.

There is a low barrier to entry with Axos Invest, which only requires $1 to begin investing and has no minimum balance requirements. Users can tailor portfolios for retirement investing or more short-term goals, like saving money to pay for college. The Axos Invest algorithm selects investments tailored to your goals from a pool of over 1,400 low-cost exchange-traded funds (ETFs) spanning a variety of asset classes and market sectors.

The simple investment platform doesn’t overwhelm and is easy to navigate, which is good for first-timers. The user-friendly interface complements the scaled-down fee structure, which may be suited to the investor who would prefer to keep things simple.

Who should consider Axos Invest

Axos Invest is a good option for new investors or anyone looking for a low-cost way to invest and manage a portfolio online. There aren’t a lot of account options, however you get access to a variety of low-fee ETFs. The site allows you to work toward specific milestones, such as retirement planning, building up a rainy day fund, or buying a home.

For investors who feel they need tax loss harvesting, understand that Axos Invest charges fees for this key feature. Anyone interested in including other types of investments in their portfolio or integrating advice for other kinds of accounts, such as 401(k)s, may want to try a more full-featured option.

Axos Invest fees and features

Amount minimum to open account
Management fees	$0 for basic services 0.24% annual fee for Tax Protection package add-on $3 per month for Portfolio Plus add-on
Account fees (annual, transfer, inactivity)	$0 annual fee $75 full account transfer fee for taxable accounts, $85 for IRAs $75 partial account transfer fee for taxable accounts, $85 for IRAs $0 inactivity fee
Account types	Individual taxable Traditional IRA Roth IRA Rollover IRA Rollover Roth IRA SEP IRA
Portfolio	10 as part of basic service, 32 as part of Portfolio Plus ($3 a month)
Automatic rebalancing
Tax loss harvesting
Tax loss harvesting detail	WiseBanyan offers a Tax Protection package that includes tax loss harvesting, selective trading and automated IRA deposits.
Offers fractional shares
Ease of use
Mobile app	iOS, Android
Customer support	Phone, Chat, Email

If you have at least $1 to invest, you can open a personal investment account with Axos. Investors can choose from these account types:

Axos Invest also allows you to roll over a 401(k), 403(b) or another qualified retirement plan into an IRA. If you have an IRA at another financial institution, that can be transferred over to Axos Invest as well.

All of these account types can be opened and maintained with no management fees. When you create a basic Core Portfolio, you pay no:

Trading or commission fees
Management fees
Custodial fees

The absence of management fees sets Axos Invest apart from the vast majority of its robo-advisor competitors. Note that SoFi Automated Investing is one of the only other robo-advisors that charges no management fees.

Core Portfolio investors will still need to pay expense ratios for the ETFs that comprise their portfolios. Axos says it intentionally selects low-cost funds for its portfolios. As of September 2019, expense ratios for Core Portfolio ETFs ranged from 0.03% at the low end to 0.67% at the high end. ETFs held included in Custom and Featured Portfolios, which are part of the Portfolio Plus package, top out slightly higher, at 0.90%.

Fees may also apply for certain services rendered by Apex Clearing, the clearing firm used by Axos Invest. For example, there’s a $10 fee to close an IRA account and you’ll pay $50 for outgoing wire transfers to foreign banks.

Axos Invest premium packages and fees

Axos Invest charges varying monthly fees for its three premium packages: Tax Protection, Portfolio Plus and Fast Money:

Tax Protection: Investors pay a monthly fee equal to the lesser of 0.02% of their average Axos Invest account value or $20. An additional $10 annual fee applies to maintain Tax Protection for IRA accounts.
Portfolio Plus: This package carries a flat $3 monthly fee.
Fast Money: A $2 flat monthly fee applies for this add-on.

Tax Protection

The Tax Protection package is available to help minimize your tax liability on your investments using three different strategies: WiseHarvesting, Selective Trading and IRAutomation.

WiseHarvesting: This is Axos Invest’s tax loss harvesting feature, which is meant to help investors offset portfolio gains by selling certain assets at a loss in order to gain certain tax benefits. Being able to deduct losses can help balance out the taxes you might owe for the year on capital gains in your portfolio. WiseHarvesting works to harvest losses automatically on a daily basis, with no trading fees and wash sale protection built-in.

Selective Trading: This allows you to avoid wash sales when harvesting tax losses. A wash sale happens when you sell one stock to harvest a loss, then buy another substantially similar stock to replace it. In a nutshell, if the IRS views a loss harvesting transaction as a wash sale, you won’t be able to take advantage of the tax deduction for the loss.

IRAutomation: You can use this tool to choose an appropriate IRA, manage and maximize your annual contributions and/or manage the conversion process if you’re switching from a traditional to a Roth account.

Portfolio Plus

Portfolio Plus allows you to create Custom and/or Featured Portfolios using an expanded list of investments beyond what’s available with the Core Portfolio account. This add-on lets you address specific investment goals or simply broaden your horizons when it comes to diversification. Some of the additional securities you can invest in include real estate investment trusts (REITs), Treasury Inflation Protected Securities (TIPS) and municipal bonds. You can create an unlimited number of Custom Portfolios and modify them as needed.

Featured Portfolios are pre-designed portfolios created by the Axos Invest team. They’re also customizable, since you can add or remove assets within a portfolio at any time.

Fast Money

Fast Money lets you schedule same-day deposits into your account, apply new deposits to your investments right away or create an automatic schedule for recurring deposits.

Strengths of Axos Invest

No basic account fees: Axos Invest charges no account management fees for its basic Core Portfolio accounts, aside from the expense ratios of the investment themselves. That’s a big advantage in a field where other companies charge 0.25% to 0.89% for assets under management, depending on the amount.
Low account minimum: You can open an account for as little as $1, so even a beginning investor can get started easily. Compare that to Schwab Intelligent Portfolios, which require at least $5,000 to open an account, and Vanguard Personal Advisor Services, which require at least $50,000.
Automatic rebalancing: When you make a deposit or withdrawal or earn dividends, Axos Invest’s software examines your portfolio and rebalances it as needed based on the amount of free cash available or asset classes that have drifted off base. That removes the burden of having to worry whether your portfolio still aligns with your goals.
Investment options: Axos Invest points its clients toward low-cost ETFs, primarily from companies like Vanguard, iShares and State Street Global Advisors. The Core Portfolio offers a decent selection of investment choices but if you’re looking to branch out, the $3 fee for Portfolio Plus grants access to more asset classes.

Drawbacks of Axos Invest

Tax loss harvesting costs: While many robo-advisors offer tax loss harvesting as part of their basic service, Axos Invest does not — and if you opt in, you’ll pay a monthly fee of either 0.02% of your average account value or $20, whichever is less.
Limited account options: For now, you can open only a taxable account or a traditional, Roth or SEP IRA. For now, users can share their goals with each other on the platform, allowing both people to see what kind of progress they’re making toward the same goal, but they can’t work together in the same account.
Guidance is a work in progress: Although the site leads new customers through a goal and risk questionnaire to gauge where they hope to go and how soon they hope to get there, the technology does not yet take other assets into account — such as how much they’ve already saved. There’s also not much in the way of educational tools and resources, something many robo-advisor competitors offer. This may not matter much to an investor who’s completely hands-off, but it’s a nice extra to have for the newer investor who wants to learn the basics.

Is Axos Invest safe?

All investments carry risk and Axos Invest attempts to minimize that risk by insuring investor accounts. The robo-advisor is a member of the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000.

Final thoughts: Who should consider Axos Invest?

Axos Invest is a good option for a new investor or anyone looking for a low-cost way to invest and manage a portfolio online. Axos Invest offers automatic rebalancing and access to a significant number of low-fee ETFs. The robo-advisor allows you to work toward specific milestones, such as retirement planning, building up a rainy day fund, or buying a home or vehicle. It’s economical investing, without a lot of flashy bells and whistles.

That said, for someone looking specifically for tax loss harvesting, Axos Invest’s fees are comparable to other robo-advisors that include it in their service offerings. Anyone interested in including other types of investments in their portfolio, integrating advice for other kinds of accounts, not to mention access to advanced investment analysis or education tools, may want to try a more full-featured option.

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Rebecca Lake |

Rebecca Lake is a writer at MagnifyMoney. You can email Rebecca here