Hedgeable isn’t a run-of-the-mill online investment advisor. It is a tech startup. Employees are referred to as “ninjas”, culture is very important, and suit wearing is forbidden. It is mission-driven and idealistic with a focus on innovation and social responsibility. Hedgeable eschews the prevailing industry standard, Modern Portfolio Theory, for something more dynamic and personalized when it comes to portfolio construction. The founders at Hedgeable believe that the most wealthy have the best access to wealth management, and are able to protect themselves against loss by “hedging” their bets.
Hedgeable has registered Assets Under Management (AUM) of $80 million. Spread over 1,950 accounts, that yields an average account size of $40,900. It offers an array of account types for a robo-advisor, including taxable accounts, IRAs, Roth IRAs, Sep IRAs, Trusts and 401(k)s. The 401(k) plans are for businesses, while it also offers rollover IRAs to transfer existing 401(k) accounts to Hedgeable.
Fees and investing
While every account receives the same service, there is a fee schedule based on account size. Up to $50,000 will cost 0.75%, and anything larger drops the fee in 0.05% increments, until you hit 0.3% at $1 million. This is a “wrap fee,” so it includes everything. There are no additional account opening fees, commissions, or trading fees.
There is no minimum account balance required. If you decide to open more than one account to pursue different goals or to have different account types for tax reasons, the total of your investments is used to calculate your fee, so you won’t be paying any more than if your balance were in a single account.
You start by creating an account with your basic info: name, email, phone, country of residence (you must be a U.S. resident). Then come 10 questions to help customize your portfolio. Be prepared to answer what type of account you want, how much you’re investing, risk tolerance, income and tax filing status.
At this point you’ll be asked to either submit an application or schedule an appointment with a Hedgeable representative to answer any questions you have about the service. The application process is short, and requires contact details, your Social Security number and account funding information.
What you get
Portfolios are made up of mutual funds, ETFs and individual stocks across 16 different asset classes. Portfolios are automatically rebalanced and tax-loss harvested. They are constructed and monitored to provide downside protection in the event of a market crash. There is a high degree of personalization, including socially conscious investing, a bitcoin option, and individual stocks. For higher net-worth individuals there are also opportunities for venture capital investing.
Hedgeable uses a “core-satellite” approach to portfolio construction. Portfolios consist of a “core” made up of passively managed index funds, and actively managed “satellites,” made up of any number of investment types. This structure provides the low cost, low tax and low volatility offered by index funds and ETFs, while providing the investment manager room to outperform benchmarks with actively managed assets.
Hedgeable also offers a rewards scheme. You get points for referring people, sharing on social media, and funding your account for the first time. The list of point-earning activities does not include passive point earning for invested accounts.
Hedgeable offers an innovative approach to the field of robo-advising. The most common approach is to set up a few buckets, usually ETF portfolios based on risk, and let people pour their money into one. Hedgeable has combined progressive portfolio theory with a mission-driven approach to offer a variety of investment options beyond just ETFs. These include venture capital opportunities, Bitcoin and social-impact investing.
Compared to some robo-adviosrs, there is a lack of goal-based account options with Hedgeable. But what Hedgeable does offer is an innovative, tech-happy, socially conscious investment opportunity.
(Find our interview with the Hedgeable Sales team here)