Test Accounts

In my investigations I came across some interesting alternative investment platforms. I’ve documented these here. A few were of particular interest. I decided to open a test account in each and fund with $10,000. I was interested in seeing how easy they were to use and be able to track their performances.

Betterment – The account setup was done entirely online. First was a simple questionnaire that determined the allocation mix for me. In my case it was 55% stock and 45% bonds. You can modify your answers to change these, or manually adjust the allocations, but I did not. Next I filled out a form with personal information and some details about the bank account that will link to your Betterment account (for deposits and withdrawals).

Betterment used a standard approach to verify the bank. They made two small deposits and withdrawals. I checked the account and got these amounts and entered them on my Betterment account site. This verified that the bank linkage was valid. I then initiated a deposit. Once Betterment received the deposit they immediately allocated the balance over the funds they selected. In my case, this entire process took three days, and I had 11 ETFs in my account. It was an extremely easy process.

WealthFront – The setup process was the same as for Betterment. After the questionnaire, they suggested a mixture of 56% stock and 44% bonds. This is almost identical to Betterment’s recommendation.  The same micro deposit approach was used to link to the bank account.

I requested the deposits for both Betterment and WealthFront at the same time. The funds were sent from my bank early Thursday morning. By midday Thursday Betterment acknowledged receipt and allocated the money.

WealthFront uses another company to hold the assets and the requested funds were sent to this firm. This has introduced some delay. Also, from WealthFront, there will be a 2-3 delay before the funds are allocated.

Folio Investing – The setup for this account was a little different because I already had an account with them (from my Prosper peer to peer test account). This required a call to their customer service to straighten me out. Once I went in as an entirely new customer, the online account setup went easily. They did not offer to link my account to a bank. One of the deposit options was bill pay from a bank. This is the one I used.

There was some work to do once the account was funded. I needed to pick investments. I had decided to use some of their ready to go portfolios. I looked through the list picking likely candidates and viewed the details of several before settling on four (this research can actually be done before you open an account).

I also decided to build my own fifth portfolio that used the allocations I am using overall. I selected an ETF for each of my sub allocation classes. I tried to build this portfolio, but couldn’t until they receive my deposit.

Lending Club IRA – This was the most difficult of the four because it was an IRA (I don’t remember any difficulty when I setup the small regular account). The IRA is held by a third party custodian. This required setting up an account with the third party.

The third party did initiate a rollover from one of my current IRA custodians. This has initiated a complex process that will take some time.

I’ll update the status next week.