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Future Advisor

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  • Future Advisor

    FutureAdvisor (one of the many robo-advisor products coming up) allows you to upload your data in the same style as Personal Capital or Mint and make a quick analysis of your asset allocation at no cost. The algorithm is NOT flexible -- you choose "conservative" "moderate" or "aggressive" and then it spits out the recommended re-balancing needed to fit their algorithms predicted asset allocation.

    On a whim, I tried it out and was surprised to see the asset allocations pan out like this:

    38 yo AGGRESSIVE allocation

     Domestic Total Stock Market 27%
     Domestic Small Capitalization Stocks 3%
     Real Estate Investment Trusts 7%
     International Total Stock Market 33%
     Emerging Market Stocks 17%
     Total Bond Market 7%
     Treasury Inflation Protected Securities 6%

    38 yo MODERATE allocation

     Domestic Total Stock Market 25%
     Domestic Small Capitalization Stocks 3%
     Real Estate Investment Trusts 6%
     International Total Stock Market 32%
     Emerging Market Stocks 17%
     Total Bond Market 9%
     Treasury Inflation Protected Securities 8%

    38 yo CONSERVATIVE allocation

     Domestic Total Stock Market 21%
     Domestic Small Capitalization Stocks 2%
     Real Estate Investment Trusts 5%
     International Total Stock Market 27%
     Emerging Market Stocks 14%
     Total Bond Market 17%
     Treasury Inflation Protected Securities 14%

    I'm surprised by their heavy reliance on International/Emerging. I split domestic/intl stock 70/30 at present. It looks like they aim for the reverse 35/65. I also see they throw caution to the old "age in bonds" rule even for their conservative AA. Anyone have experience with this? I'm too hands on to turn over my retirement to a roboadvisor but I'm interested about the thought process behind the AA.

  • #2
    I currently use then because my work retirement accounts were already with Fidelity and Future Advisor will manage current retirement accounts for free.

    This is my current break down:

    33 aggressive

    U.S. Stock 31%
    Foreign Stock 27%
    Emerging Markets 18%
    REITs 11%
    Bonds 7%
    TIPS 6%


    • #3
      I think your breakdown seems appropriate based on the age-based "glide path" most Asset Allocations follow when compared to mine. I guess my question is, usually a portfoilo will have age in bonds (in your case 67/33%). Within that stock, usually people will have 70% domestic/30% international. For an 'aggressive' approach: less bonds, more stock, more REIT, more small cap, less large cap.

      Look at your distribution:

      13% bonds at age 33. definitely aggressive.

      Within stocks:
      31% US based and 45% intl (foreign+emerging). your ratio is reversed! (40% of all stock is US/60% intl).

      I love the functionality of the re-balancing but I'm very surprised at the allocations they propose.


      • #4
        I am not comfortable overweighting international equities (compared to U.S.), which appears to be their investing philosophy. Otherwise, it looks reasonable.


        • #5
          I am especially not comfortable overweighting emerging markets.