The popularity of robo-advisors such as Asset Builder has increased as a new generation of Internet-savvy investors infiltrate the market. Robo-advisors provide a medium between do-it-yourself and traditional investment plans. Through algorithm-based software programs, computers can now allocate your assets with minimal human interaction.
Asset Builder offers the simplistic services of an internet-based investment firm while offering the guidance of human representatives. This article reviews Asset Builder in detail to help you decide if this robo-advisor is right for you.
Asset Builder- Details and Overview
Asset Builder is headquartered in Plano, Texas. The firm was co-founded in 2006 by Kennon Grose and Scott Burns, now retired. Scott Burns was a well-known financial advisor that heralded the Couch Potato Portfolio while Kennon Grose was an entrepreneur and broker. Since its inception, Asset Builder has expanded to a corporate board of seven qualified professionals.
They believe their firm is differentiated from the competitors by their focus on Dimensional Fund Advisors (DFA). Asset Builder strives to achieve high returns with low risks by implementing the Modern Portfolio Theory.
Asset Builder Process Explained
One of the firm’s greatest advantages is its simplicity. Their portfolios consist of four main steps: simple indexing, simple diversification, smart allocation, and smart indexing. This model eliminates manager expenses, diversifies portfolios, and expands asset classes. Also, the Fama/French three-factor model of investing is applied to asset allocation.
The steps are guided by the firm’s belief in the Modern Portfolio Theory, which specifies diversifying an investor’s portfolio to reduce risks. This includes incorporating REITs, international and emerging market investments, and U.S. equities. Eight pre-planned portfolios determine the level of investment in each of these categories.
Creating an Account
Getting started with Asset Builder is very easy. The firm uses a quick quiz to assess your basic qualifications and needs. Moreover, the quiz asks about your initial and monthly investment, the length of time you’d like to invest, and what type of investor you consider yourself to be. The minimum initial contribution for this service is $50,000.
Once you’ve completed the quiz, the software will suggest a portfolio based on your answers. These portfolios range from modest capital preservation to aggressive growth. To continue, you must disclose your basic information and the desired type of investment account.
Asset Builder Rates
Once you’ve established your basic information and portfolio, an account custodian will contact you to begin your account, discuss your account fees, or ask for additional details. These fees range between .24% and .45%. There are no custodial fees. However, you must pay for the initial mutual funds, which cost between $240-$280.
Schwab Institutional administers the firm’s accounts. One can make all payments and future investments either on their website or at a Schwab location. If you need to transfer funds, Schwab also offers Money Link.
Pros and Cons of Asset Builder
#1. Expense Fees Are Under 1%
One of the biggest appeals of a robo-advisor service is lower account fees. Asset Builder offers competitive fees, ranging from .24%-.45%, depending on your investment and portfolio. By contrast, do-it-yourself mutually traded funds and professionally-managed EFT’s are usually above 1%.
#2. Easy-to-Use Software
Getting started is extremely easy and maintaining an account is even easier; Asset Builder’s philosophy allows investors to sit back and relax with minimal intervention. The website is also very user-friendly and offers updated blog entries providing financial advice and detailed articles about different portfolio strategies.
#3. Relatively Low-Risk
The use of the Modern Portfolio Theory creates a very low-risk investment. You can also choose a portfolio that pursues more aggressive growth, allowing you to increase your investment in higher-risk categories, such as emerging markets.
#4. Reviewed by a Qualified Team
For the most part, your interaction with the team will be minimal, but their experience and expertise are a great feature for a leery investor.
#5. Charles Schwab Custodial Management
Although Asset Builder is an online firm, Charles Schwab manages their funds. Charles Schwab has been in business since 1971 and offers user-friendly online services as well as brick and mortar locations for their clients to complete withdrawals and deposits.
#1. Account Fees
Although the fees are less expensive than DIY funds and professionally managed accounts, they are still a little higher than other robo-advisor firms, such as Vanguard, Weatherfront, and Betterment. You also need to pay for the Schwab Trading fees, increasing the overall initial fee.
#2. $50,000 Buy-in
Many robo-advisor competitors allow a much lower account minimum, such as $500 or $5000. Also, Asset Builder representatives often manage these accounts for free under a certain amount.
#3. Personalized Advisement
Asset Builder’s simplistic model is easy to use and user-friendly. However, the pre-planned portfolios are fairly rigid, and one must invest any funds through an advisor.
Asset Builder Customer Service Review
Asset Builder has been in business since 2006 and is well-regarded within the financial industry. It ranked #14 on Business Insider’s Top 15 Robo-Advisor list. The firm also received an impressive score of 4.5 on Paladin’s Transparency Index, which rates how accurately and honestly a company discloses their services. However, personal investor reviews are scarce, negative or positive.
Putting It All Together
If DIY or traditional investments don’t quite fit your lifestyle, consider robo-advisors. Asset Builder is a reliable robo-advisor that you might consider if you’re looking for a simple strategy with minimal human interaction. This firm uses eight pre-planned portfolios and a simple algorithm to ensure low-risk returns.
Account fees are a little higher than other robo-advisor firms but are within competitive ranges. Asset Builder lacks consistent feedback from client investors. However, they have obtained verification from several high-authority groups. Have you used Asset Builder? Please share your experiences with other potential investors.
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