I’m always on the lookout for tools that I think can make investing easier for people. WiseBanyan is one of those tools – an excellent roboadvisor that you can use to start investing. In this WiseBanyan review (now known as Axos Invest), I’m going to go over what WiseBanyan is, how it works, and let you know why I think this is a great roboadvisor for anyone looking to get started investing.
As a bit of background, when it comes to investing, those of us that write about personal finance often think of investing as straightforward. The truth, however, is that while investing as a concept is straightforward, the actual process of investing can be harder than we make it out to be.
In an ideal world, investing would be as easy as opening up a bank account. You’d be able to open an investment account, put money into it, and walk away without having to make any decision other than deciding how much money to put into your account.
This is why I’m such a big fan of roboadvisors. These investment platforms are basically the closest we can get to having investing be as easy as opening up a bank account – just open up an account, put in some money, and walk away. Your money is then automatically invested for you in a well-diversified portfolio appropriate to your needs and risk tolerance.
One of the investing apps that I use is WiseBanyan. I’ve used it since 2015 and have had a good experience with this little-known roboadvisor. A few years ago, WiseBanyan was purchased by Axos and rebranded as Axos Invest, so be aware that WiseBanyan is technically now called Axos Invest. For purposes of this post, I’m still calling it WiseBanyan, but its official name is Axos Invest.
What Is WiseBanyan (Now Called Axos Invest)?
WiseBanyan (now Axos Invest) is a roboadvisor similar to Betterment, Wealthfront, or M1 Finance. You provide WiseBanyan with some information about yourself – things such as your risk tolerance, age, goals, how much you’re trying to save, etc. – and WiseBanyan will provide you with a recommended asset allocation of stocks and bonds appropriate to your situation.
After that, all you have to do is deposit some funds into your account and WiseBanyan will automatically invest your money for you according to your asset allocation. WiseBanyan currently supports taxable accounts, as well as tax-advantaged accounts such as IRAs, Roth IRAs, and SEP-IRAs.
Previously, what made WiseBanyan really good was that, unlike other roboadvisors, WiseBanyan did not charge any management fees. Unfortunately, WiseBanyan has since changed course and now charges a 0.24% management fee for balances above $500. This is still very low and comparable to roboadvisors like Betterment or Wealthfront, which each charge a 0.25% management fee.
However, M1 Finance still charges no management fees and is also a good roboadvisor that you can use for your investing needs. M1 Finance requires a slight bit more work to understand how to invest, so if you wanted to opt for the absolute easiest investing platform, the 0.24% management fee may make WiseBanyan worth it for you,
WiseBanyan’s Investment Philosophy
WiseBanyan’s investment philosophy is similar to the philosophy that most smart financial folks adhere to these days: diversify, keep costs low, and go for passive index investing. WiseBanyan uses modern portfolio theory, which is a fancy way of saying that you’re maximizing your return for a given asset allocation while taking on the least amount of risk. The goal in modern portfolio theory is to stay on the below line – what is called the efficient frontier.
In keeping with its philosophy of low cost investing, WiseBanyan will generally invest in low-cost Vanguard ETFs, although it’ll also sprinkle in ETFs from other companies if you opt to activate tax-loss harvesting. According to WiseBanyan, the average expense ratio of the funds it invests in is 0.12%. That’s pretty darn low.
If you’re curious, here are the primary ETFs that WiseBanyan uses in each asset class:
- US Equities: VTI
- International: VEA
- Emerging Markets: VWO
- US Bonds: VGIT
- Short-Term US Bonds: VGSH
- Corporate Bonds: LQD
- Short-Term Corporate Bonds: VCSH
- Short Term High Yield Bonds: SJNK
- Treasury Inflation-Protected Securities: TIP
- Real Estate Investment Trusts: VNQ
I like WiseBanyan because the bulk of their investment options are Vanguard ETFs, which are the lowest cost and best index funds currently available. The other options they use are also low-cost and are good investment options.
Is WiseBanyan Safe?
Yes. WiseBanyan is an SEC-registered investment provider and your funds are insured for up to $500,000 by SIPC. In other words, if WiseBanyan were to become insolvent, you’d still be covered by the SIPC insurance.
WiseBanyan Portfolio Examples
There are two options when it comes to setting up your stock/bond allocation with WiseBanyan. You can either manually set it to whatever you want or you can answer a few questions and WiseBanyan will choose an appropriate portfolio for you based on your particular situation.
For example, here’s a conservative portfolio that WiseBanyan put together for my own account. I have a long-term view when it comes to investing, so I opt for an aggressive allocation of 100% stocks. Here’s how my allocation is automatically set up.
In terms of allocation, WiseBanyan does let you tinker with what you want things to look like. You can set it to be as aggressive as 91% stocks and 9% bonds or as conservative as 9% stocks and 91% bonds.
Things To Consider If You’re Thinking About WiseBanyan (Now Called Axos Invest)
When I first wrote this review several years ago, I pointed out that WiseBanyan was taking a novel approach to roboadvisor services by opting not to charge a management fee. My prediction was that at some point, they’d either shut down or would have to start charging a fee.
It turns out I was right. In 2020, WiseBanyan updated its pricing structure to charge account holders a 0.24% management fee. This is still a very fair price and is actually a slightly lower cost compared to most other roboadvisors. If you’re already using WiseBanyan, I wouldn’t close your account simply because they’re now charging this fee.
At the moment, I’m only aware of one roboadvisor that truly charges no management fees at all. M1 Finance is a good option and probably one you may want to consider if you’re looking for a roboadvisor with no costs at all.
One other thing worth noting is that WiseBanyan doesn’t link to Mint or Personal Capital, which is a bit of a bummer for those of us that like to track our accounts in one place. They keep saying that it’s something that’s in the works, but I haven’t seen any progress on that front in the two years I’ve been a WiseBanyan client.
Who Should Use WiseBanyan?
I think WiseBanyan is a good robo advisor for anyone who is a beginner investor and wants to make sure that they’re investing correctly.
I probably would be wary about using WiseBanyan for a sizeable taxable account. You never know what might happen in the future, and if WiseBanyan shuts down or decides that it needs to start charging higher management fees, you might be left in the position where you’ll need to liquidate your account and incur some tax liability. I think WiseBanyan would be a better option for a tax-advantaged account like a Roth IRA since you can easily move your investments around without worrying about any potential tax implications.
That said, when WiseBanyan charged no fees, I often recommended WiseBanyan above all other roboadvisors. Now, however, the small 0.24% fee does have to weigh into my recommendation. For the most part, I now recommend people use M1 Finance if they’re looking for a roboadvisor that makes investing very easy and is accessible to anyone looking to start investing and that wants to make sure they’re doing it correctly.
I hope that information helps. Feel free to drop a comment if you have any questions about WiseBanyan.