One of the keys when it comes to investing for the long term is to make sure you’re minimizing the fees you’re paying to invest your money.
Whether it’s plan administration fees for the company you’re investing with, mutual fund expense ratios and fees, or fees for added account functionality, the more you can minimize how much you’re paying, the better.
Morningstar reports that the average expense ratio for actively-managed equity mutual funds is 1.2% and investment grade bond funds have an expense ratio of 0.9%. For me, I prefer to invest in mainly low cost index funds with expense ratios that are much lower.
Beyond saving money on the expense ratios, I also would love to save money on the administration fees I pay in order to invest. My company 401(k) has fees just under 1%, which is way too much for my tastes. I’ve stopped investing there first since there is no company match.
I have an account with Betterment, and I love their automated investing service, but they still have a .25% annual management fee on my sub $10,000 balance.
This past week I was doing some research on the new slate of robo advisors that have popped up, and one of them jumped out at me because the company advertises itself as the world’s first FREE financial advisor. Not only do they invest your money for you in a slate of well diversified ETF index funds, and rebalance your holdings on a regular basis, but they don’t charge you any fees in order to do so.
This all sounded too good to be true, so I decided to do a full review of this new automated investing service called Axos Invest, to see what they are all about.
WiseBanyan Acquired By Axos Financial: Becomes Axos Invest
Axos Financial has acquired WiseBanyan Holdings.
As of October 2019 and moving forward WiseBanyan will be known as Axos Invest.
Axos Invest will become a part of the Axos Financial online banking platform. Check out our full review of Axos Bank.
WiseBanyan/Axos Invest History
Just about 5 years ago Axos Invest launched, under the name WiseBanyan. They had the goal of being the world’s first completely free financial advisor.
Here’s their reasoning behind why they launched their site.
Herbert Moore and Vicki Zhou founded WiseBanyan after seeing that the incentives between financial advisors and clients were often misaligned. They saw this firsthand while working in asset management and investment banking respectively, and later as colleagues at a quantitative asset management firm. They realized that the main cause of misalignment was a conflict of financial interests, which often resulted in high fees, unnecessary tax consequences, and unreasonable account minimums for the clients. As a result, they set out to build a company that was not incentivized to earn money at its clients’ expense.
WiseBanyan began with the idea that investing is a right – not a privilege. Our mission is to ensure everyone can achieve their financial goals, which starts with investing as early as possible. This is why there is no minimum to start and we do not charge fees. We hope you are as excited about WiseBanyan as we are, especially what it means for you, your friends, and society as a whole.
Axos Invest was launched with the hope of making investing easy, accessible and cheap – even for beginning investors who could only invest a small amount every month.
So how do they make their money if they don’t charge any management fees, rebalancing fees or trading fees? Axos Invest has premium add-on client services and products that you can pay for (see below), but their base product is free. From the Axos Invest Facebook page:
We have paid investing and client services to compliment our free managed portfolios. Every paid service will have demonstrable value to clients – an example of one product is “Tax Protection” which includes tax-loss harvesting.
So the core product is free, and will remain that way, while there will be fees for some add-on products like tax loss harvesting.
Axos Invest Accounts Now Available
After reading up a bit about Axos Invest I was intrigued enough to sign up for one of their accounts. I went to their site to find that their service was invite only, and there was a waitlist to get an invite. The reason for that, according to Axos Invest, was because “we work with a broker-dealer that still uses manual processes to open your account. Our waitlist ensures we can control the flow of new clients to our broker-dealer and that new client accounts are invested quickly and seamlessly.“
Thankfully the waitlist is now a thing of the past, and you can now open a new account with Axos Invest at any time! Head on over to their site via my exclusive Axos Invest invite link below to get your account now:
Open Your FREE Axos Invest Account Now
Opening An Account With Axos Invest
After I had clicked on the link in the welcome email, it dropped me right into a brief questionnaire to assess my risk tolerance, time horizon for investing and more.
While you’re answering the questions you’ll see a progress bar and a “current risk score” listed to the right, telling you just how conservative or aggressive Axos Invest believes you are.
My risk score went up and down throughout the survey based on my answers, and when I was finally completed it gave me a risk score of 7.2. That would give me an estimated asset allocation of 65% stocks to 35% bonds – which seems about what most would suggest as I’m relatively conservative in my investments, and the bond allocation roughly matches my age (put your age in bonds!)
I decided that I wanted to change my risk score and asset allocation to be a bit more aggressive, however, and you can do that simply by moving the slider to the right (or left if you’re more conservative). I ended up with closer to a 75/25 stocks to bond allocation.
After completing the survey you click on the “Open My Account” button, which takes you into the account opening process. It will ask for all of your personal information including an email, password, employment information and social security number (like you would have to at any brokerage).
Once you’re done entering your personal information you’ll be asked to choose an account type. Currently you can choose:
- Taxable Investment Account
- Roth IRA
- SEP IRA
- Traditional IRA
After you choose an account type you’ll be asked to link a bank to fund your account. You can then choose to fund the account with as little as $10. If you want, you can also set it up to automatically invest for you every month. I have it set to automatically invest $300/month for me on the 30th of every month.
Once you’re done your account will be sent to Axos Financial for approval. Their site says it takes about 5 business days for an account to be approved.
Axos Invest Investment Philosophy
Axos Invest will invest your funds based on Modern Portfolio Theory (MPT).
We use the tools of Modern Portfolio Theory to design the optimal portfolio for a given level of risk. In addition, we further optimize our investment process to minimize tax consequences and streamline the reinvestment of dividends and contributions.
Their investment philosophy is built upon four main pillars:
- The value of diversification
- Keeping fees as low as possible
- The value of passive investing
- Starting sooner rather than later
Axos Invest will attempt to give you a portfolio that is well diversified, low cost, and at low minimums so just about anybody can get started now. They’ll use the ideas behind MPT to give you the optimal portfolio for your given risk score.
The Actual Investments
So what are you getting when you invest with Axos Invest? You’re getting a well diversified portfolio that contains passively managed exchange-traded funds (“ETFs”).
The funds held with Axos Invest have an average fund fee of 0.12% – the only fees you’ll pay to invest. Here is the breakout for the individual funds they use (that is subject to change, and probably will) and their expense ratios:
- Vanguard Total Stock Market ETF (VTI): 0.05%
- Vanguard FTSE Developed Markets ETF (VEA): 0.09%
- Vanguard FTSE Emerging Markets ETF (VWO): 0.15%
- Vanguard Intmdte Tm Govt Bd ETF (VGIT): 0.12%
- Vanguard Short-Term Government Bond Index ETF (VGSH): 0.12%
- iShares Investment Grade Corporate Bond ETF (LQD): 0.15%
- State Street Global Advisors Barclays Short Term High Yield Bond Index ETF (SJNK): 0.40%
- iShares Barclays TIPS Bond Fund (ETF) (TIP): 0.20%
- Vanguard REIT Index Fund (VNQ): 0.10%
As you can see they have a broad diversification that also includes real estate via the Vanguard REIT Index fund, which isn’t something that Betterment gives you.
The performance of Axos Invest has been pretty good. As you can see from the screenshot from Barron’s “Ranking the Robos” article below, WiseBanyan/Axos Invest had the second best two year annualized return, through 6/30/19. Not too bad!
Axos Invest Mobile App
When the service first came out one of the complaints some users had was that there was no mobile app for the service. As of January 2016 there was a mobile optimized app for iOS released, and shortly thereafter an Android app was released as well.
From the app you can now do things on the go like check your balances, view your allocations, make a quick deposit and more. The apps really are very pretty to look at, and are a pleasure to use.
Axos Invest Fees & Account Charges
Probably one of the biggest draws for Axos Invest at this point in time is the fact that they are essentially a fee free service. Here are a few of the fees (or lack thereof) that you’ll see with the service:
- Management fee: FREE
- Trading fees: FREE
- Rebalancing fees: FREE
- Dividend reinvestment fee: FREE
So essentially the Axos Invest service is free to use with no management or trading fees, and no fees to rebalance your account. Competing services like Wealthfront or Betterment will charge anywhere from a 0.15%-0.35% annual management fees, so right off the bat you’re saving those fees, which can add up to big money over time.
There are some fees related to transferring funds via wire transfer, or do a full account transfer out, although regular electronic funds transfers (EFT) are free.
- Electronic Fund Transfer (EFT) fee: FREE for deposits or withdrawals.
- Wire transfers in: FREE (although your bank may charge).
- Wire transfers out: $30 per wire transfer.
- Account closing fee: FREE.
- Full account transfer out fee: $75 per account.
- Partial account transfer out fee: $5 per security ($25 minimum/$75 max).
- Disbursement of funds by check by mail: $20 per check.
- Returned EFT or check fee: $35 per occurrence.
As mentioned above, Axos Invest’s product and service is free with the exception of a few small fees for certain types of transfers, or check disbursements. They plan on making their money through add-on products and services.
Premium Add-On Products & Services
There are several premium packages in your Axos Invest account that have a fee associated with them. You can turn them off and on whenever you want.
Currently the premium packages include:
- Portfolio Plus: The ability to create your own custom portfolio from an expanded list of investments. You can choose from lists of different investment classes and types and add up to 20 investments to each portfolio you create. It costs $3/month to use this add-on package.
- Fast Money: When activated this gives you quick same day deposits, auto-deposit scheduler and overdraft protection. It costs $2/month to use this add-on package.
- Tax Protection: This package will give you “WiseHarvesting” tax loss harvesting, selective trading (to remove ETFs you hold elsewhere to avoid potential for wash sales) and IRAutomation, which helps you to maximize the use of your retirement account deposits, setup auto deposit plans and more. Each month the cost will be the lesser of 0.02% of your average Axos Invest account value (0.24% annually) or $20. So if you have $5,000 in your account, the monthly cost would be $1.
Using these add-on packages is purely optional, but even if you were to turn them all on it likely isn’t going to cost you more than a few bucks per month.
Axos Invest: Great For Cost Conscious Investors
When I first read about Axos Invest I dismissed it out of hand because I thought that there had to be a catch somewhere, there’s no way they were offering this service for free when others are charging anywhere from .15%-1.0% annual management fees for similar services.
After looking into it further, however, it does truly seem like Axos Invest is committed to offering a fee free investing service, and plan to keep it that way.
The question is – is it sustainable? They intend to make money for their service via add-on products, like tax-loss harvesting, but we’ll see if that will be enough to keep them going for the long term.
For now, however, it does seem like a good option for newer investors. Not only can you start investing with no account minimums, and no management fees – but you can buy fractional shares with as little as $10 and get a highly diversified portfolio that should match the market in the long term. The account has SIPC protection that covers up to $500,000 per client as well, so if Axos Invest were to go under you’d be covered.
I’ve signed up for my own Axos Invest account and have been with them now for a couple of years. They are one my new go-to recommendations for new investors.
Open your own free account below via my invite link.
Get Started With Axos Invest Now!
| Robo-Advisor | Assets Under Management (AUM) | Annual Fee | Account Minimum | Bonuses | Review |
|---|---|---|---|---|---|
| Betterment | $15 billion | 0.25% of account balance. 0.40-0.50% w/ human advisors | None | Up to one year managed FREE | Review |
| Wealthfront | $12 billion | 0.25% of account balance | $500 | $5k managed FREE (Bible Money Matters readers) | Review |
| M1 Finance | $1 billion | FREE (fees for add-on services) | None | Review | |
| Blooom | $3 billion | $10/month any account size | None | FREE 401(k) Checkup | Review |
| Axos Invest | $153 million | FREE (fees for add-on services) | None | Review | |
| Acorns | $1 billion | $1/month under $5k. 0.25% of account balance above $5k. Free for college students. | None | Review | |
| Stash Invest | $600 million | $1/month under $5k. 0.25% of account balance above $5k. | $5 | $5 New Account Bonus (Bible Money Matters readers) | Review |
| SigFig | $120 million | Under $10k FREE; 0.25% of account balance above $10k | $2,000 | ||
| Personal Capital | $8.5 billion | 0.49% to 0.89% of account balance | $25,000 | Review | |
| Wealthsimple | $5 billion | $0-$99,999 0.50%/yr; $100k+ 0.40%/yr | None | Up to $10k managed free (Bible Money Matters readers) | Review |
| Charles Schwab | $15.9 billion | FREE (They require you to hold 6-30% of portfolio in cash) | $5,000 | ||
| Fidelity Go | N/A | 0.35% of account balance; | $5,000 | ||
| Vanguard | $101 billion | 0.30% of account balance | $50,000 |
Axos Invest
Pros
- No management fees
- No trading or rebalancing fees
- Proven strategy
- Low minimum investment
- $5 Bonus
Cons
- Uncertain sustainability of service
I continually read that not having a mobile app is a con. In this world everyone feels the need to be in constant contact with everything. I believe this is a pro and not a con. This is investing not trading. There is no reason to feel the need to check on the balance every day or for some multiple times a day. It would be best if they only looked monthly or even less. This is the type of account that you set and forget and let time and compounding work its magic. If you want to be a trader and not an investor there are plenty of other options. I am also concerned about the free platform and how long it can last but they are SIPC covered so if they would go out of business my investments are safe. If anyone wants to try them out and avoid the waiting list here is my referral link. https://axosinvest.com/r/qSrQy7AmY. I used one to avoid the wait list to join.
Some months ago I was very surprised to read about a fee free no cost advisory service for investors. I was put on their waiting list and completely forgot about it until I read a review of it and then contacted them. I was accepted and began the rather simple sign-up procedure, but had questions about the firm after reading their required contract and did not complete the final step. I’ve been a small investor using my personal research, Motley Fool for advise and Foliofn investing service as my broker for about 3 years. I’ve had moderate success with portfolio rate of return is over 35% which is all well and good. Foliofn is also WB’s broker which charges either an unlimited annual fee or a quarterly charge depending on your activity and imposes fees for limited, stop orders, etc. Do you know if WB will provide tax documents similar to Foliofn, ie gain/loss, 1099B, etc? Also I’ve read in another review that they are registered with SIPC but your investments are not protected if they go bellyup. Any thoughts on that?
You can download your tax documents in your account by clicking the “More” button in the upper-right corner of your Axos dashboard and selecting “Documents.” You will receive an email during tax season when your documents are ready to view.
With Axos Invest your investments are protected like with any other broker. They are SIPC insured, so if they were to become insolvent, the SIPC insurance protects you, the investor, against losses that stem from the financial failure of the brokerage company. The account is also covered by Axos Invest’s broker dealer FOLIOfn Investments. Here are the full details from the FAQ:
I started with Axos Invest early last year, changing from Betterment. Besides not having fees beyond what is included in each ETF itself, the average expense ratio for the funds is 0.11% with Axos Invest vs 0.14% with Betterment. While they do use many of the same funds, Axos Invest avoids US Short Treasury bonds and instead goes more for TIPS and high quality corporate bonds, which while still being quite safe investments, have more growth potential, and even pay dividends!
Also, as a “Founding” member, I have been given Tax-Loss Harvesting free for 6 months. I have noticed it works much more actively than Betterment’s. I have only good things to say, and good experiences with Axos Invest.
Here is an update on my Axos Invest account. I started with the minimum opening balance and have deposited the minimum amount each month since Sept. 2015. I don’t know much about this stuff and didn’t want to lose any large sums of money. I’m happy to report so far it has had a return of over 5%. Its not perfect, but when there are no management fees it’s not bad. If your interested give it a try.
Very happy with with the service provided! No need for a mobile app, if I want to see how the account it doing I just log in at home. No need to check while at work or out in the town.
Hey Peter,
any update on the account? Thinking about investing 5k into a robo
I currently have $4280 invested with Axos Invest in my Roth IRA there. The returns are around 1.2%, which I think is about what the markets as a whole have been over the same time period. I’ve been happy with the service, especially with the zero costs I’ve incurred for using them. I’d still recommend them.
If you’re interested in Axos Invest, you can read more about my “Digit and Axos Invest Experiment” here.
Thanks for your reply. Appreciate it. I think I will give them a shot.
I signed up in June 2016. I didn’t chose the aggressive investor option. I just wanted to test the waters to see how the service is, so I decided to reach a milestone of $5000 in 18 months – a 70/30 mix. Currently I have a return of 4.4% and in a couple of months I will reach my goals. My question is that during tax season, do I have to include this in my tax returns?
It all depends on what type of account you opened, whether you’ve sold the investments or not, etc. I’d recommend speaking with a tax professional to figure out what you’ll need to claim in your situation.