WiseBanyan bills itself as “The world’s first free financial advisor.” Like many startups, it is driven by a mission. WiseBanyan’s mission is to provide access to financial services to everyone, so that people can achieve their financial goals. While the core offering is free, its business model relies on clients’ purchasing additional services to generate revenue.
WiseBanyan has registered Assets Under Management of $136 million and 38,069 accounts, which works out to an average account size of about $3,700. It offers taxable accounts (though not joint accounts) and traditional, Roth and Sep IRAs. Like most other robo-advisors, you can also transfer your existing brokerage account or IRA over to WiseBanyan, or roll over your 401(k) into an IRA.
Fees and investing
There is only one plan tier with WiseBanyan: free. If you insist on handing over some money, you can pay for WiseHarvesting, the branded tax-loss-harvesting service on offer for 0.25%. While that rate is on par with Betterment and Wealthfront, it’s capped at $20 a month, so once your account hits $96,000, your fee will no longer increase.
There are no management, trading or rebalancing fees. There are some service fees charged by WiseBanyan’s broker, Apex. Those one-time fees mostly relate to closing accounts, paper checks and foreign or domestic wire transfers, and are available on the WiseBanyan site.
To sign up, submit an email address and then follow the link sent to your inbox. You’ll be asked for basic financial information before choosing a milestone. Milestones are goals, such as retirement, wealth building or building an emergency fund. After a few behavioral questions to determine your risk aversion, you’ll be presented with an investment allocation that you can adjust.
After choosing an initial investment, you’ll be presented the deposit amount and frequency required to reach your milestone, and you’ll be asked to set up an automatic deposit. You can change all the settings afterwards, including adding multiple milestones and adjusting your portfolio mix.
To complete signup, you’ll need to provide complete contact information as well as a Social Security number. WiseBanyan is available to only U.S. residents age 18 and older.
What you get
The portfolios are made up of Exchange Traded Funds (ETFs). ETFs are a broad holding of securities, and are usually based on well-known, passive indexes. These ETFs are meant to track with the market so your holdings grow (and shrink) along with the market, instead of trying to “beat” the market like more actively managed funds. WiseBanyan, like many robo-advisors, invests in these passive ETFs because of the diversification and low expense ratios.
Your portfolio includes ETFs from nine asset classes. While you can’t adjust the individual asset classes, you can change the allocation percentage for stocks and bonds. The lowest risk setting is 9% stock/91% bonds, and the riskiest setting is 91% stocks/9% bonds, and every whole-number combination in between is available as a portfolio allocation. Portfolios come with automatic rebalancing.
WiseBanyan offers a common approach to robo-advising, portfolios of market-tracking ETFs with allocations based on risk tolerance. Offering it for free, however, is not very common. And while the 0.25% fee for tax-loss harvesting brings the cost of the whole offering into normal territory cost-wise, that territory is once again abandoned as the fee caps at $96,000. There are other financial advisors that require more than that just for an account minimum.
In the effort to trim unneeded services and offer a product with an egalitarian mission, it pays to think about what ends up on the cutting floor. It might be that an unneeded service is actually worth more money than it costs. WiseBanyan is a stripped-down robo-advisor with optional add-ons. Free is free, but make sure the service is right for you before you commit.