When deciding where to manage your investments, it can be overwhelming to choose the best option. Two popular choices for financial management are Model Investing and Future Advisor. While both offer valuable services, they cater to different types of investors. In this blog, we will break down the differences to help you make an informed decision.
What is Model Investing?
Model Investing provides investors with a rules-based approach to managing their portfolios. Instead of leaving investment decisions to emotions or guesswork, it uses academic research and proven strategies to guide users. The platform focuses on long-term growth and risk management by leveraging strategies like sector rotation and asset rotation models.
Key Features of Model Investing:
- Offers multiple investment models, such as the Sector Rotation Model (SRM) and Asset Rotation Model (ARM).
- Provides clear instructions on how to implement the strategies.
- Targets long-term investors looking for consistent growth and protection against market downturns.
- Ideal for self-directed investors who want to take control of their portfolios with professional guidance.
What is Future Advisor?
Future Advisor is a robo-advisor platform designed to simplify investing for people who prefer a hands-off approach. This service focuses on managing your investments by using algorithms to create and rebalance your portfolio. It is a great option for individuals who do not want to actively manage their investments themselves.
Key Features of Future Advisor:
- Automates the portfolio management process.
- Offers free portfolio analysis but charges fees for premium services.
- Integrates with existing accounts like Fidelity and TD Ameritrade.
- Provides recommendations for tax-loss harvesting and retirement planning.
Comparing Costs
Model Investing: The platform charges a flat annual fee of $249, making it predictable and affordable for many users. There are no hidden fees or commissions, which allows investors to keep more of their returns.
Future Advisor: This service offers free analysis but charges 0.50% of your managed portfolio annually for premium services. For example, if you have a $100,000 portfolio, you would pay $500 per year in fees.
Which is Better? If you’re looking for a flat and predictable fee structure, Model Investing is the winner. Future Advisor’s percentage-based fee can become costly as your portfolio grows.
Investment Strategies
Model Investing: The platform’s strategies are rooted in research and focus on maximizing returns while minimizing risk. For example, the Sector Rotation Model (SRM) identifies which sectors are likely to perform best in the current economic cycle, allowing users to allocate their investments more effectively.
Future Advisor: This robo-advisor relies on algorithms to rebalance your portfolio regularly. While convenient, the strategies are more generalized and may not cater to specific market conditions or unique investment goals.
Which is Better? Model Investing is ideal for those who want tailored strategies and are willing to follow step-by-step instructions. Future Advisor is better suited for investors who prefer automation and a hands-off approach.
Who Should Use These Platforms?
Model Investing:
- Best for DIY investors who want control over their portfolio.
- Suitable for those who appreciate a rules-based approach.
- Ideal for long-term investors focused on reducing risk and maximizing growth.
Future Advisor:
- Great for individuals who want automated portfolio management.
- Best for people who prefer a hands-off approach to investing.
- Suitable for investors looking for integration with existing accounts like Fidelity or TD Ameritrade.
Conclusion
Both Model Investing and Future Advisor have unique strengths. Model Investing is the better choice if you want control over your investments and are comfortable following professional strategies. On the other hand, Future Advisor is perfect for those who want to leave the decision-making to automation.
By understanding your financial goals and investment style, you can decide which platform aligns better with your needs. For long-term growth and research-backed strategies, consider giving Model Investing a try.