Fees and Deposit Limits7.4/10
Ease of Use9.8/10
Account Types and Services9.0/10
- Socially responsible investing
- Zero expense ratio
- All-inclusive management fee
- Easy to use
- Add or delete holdings in each portfolio
- High management fee
- No tax loss harvesting
- Only for individual accounts
2018 Swell Investing Review
Swell Investing is unlike your typical automated investment service. This Robo Advisor will give small investors the opportunity to participate in socially responsible investing. In this day and age of climate change, deforestation, air/water/soil/light pollution, and loss of biodiversity, the Swell Investing Robo Advisor is a breath of fresh air.
Swell Investing offers investors a unique type of investment opportunity.
Swell Investing is based in Los Angeles, California and is backed by Pacific Life, which is one of the oldest and most established insurance companies in Northern America. The service was conceived as a viable alternative to other automated investment services by offering a selection of socially responsible stocks. This includes investments in healthy living, clean water, alternative energy, green technology, and disease eradication.
If all of this sounds appealing to you, wait until we get to the best part: the service only requires a minimum investment of $50. But what’s the catch? You’ll find out more in our 2018 Swell Investing review.
Swell Investing Fees
Let’s kick off by discussing the fees and deposit limits of Swell Investing. As previously mentioned above, you can begin investing in socially-responsible endeavors for a minimum investment amount of $50.
This is one of the lowest in the market. Sure, you can find Robo Advisors which offer no minimum deposits such as Betterment and Wealthsimple. But we’re talking about a different kind of investing opportunity if you decide to put your money in the Swell Investing Robo Advisor.
It used to be that SRI or Socially Responsible Impact Investing was strictly limited to ETFs and large investors. Not anymore. For a very low minimum deposit of $50, you can begin investing in Tesla Motors (TSLA), Parker-Hannifin Corp (PH), Abbott Labs (ABT), and other environmentally-friendly and socially-responsible companies.
But there’s a downside to all of this. Swell Investing will charge impact investors with a hefty management fee of 0.75% per annum. This pales in comparison to other Robo Advisors with low minimum deposits such as Wealthsimple (0.40% to 0.50%) or Betterment (0.25% to 0.40%). However, the stiff management fee is all-inclusive. The service will charge ZERO trading fees and commissions.
We find this to be a bit intriguing. With a low $50 minimum deposit, this makes Swell Investing one of the best choices for small or newbie investors. But with the larger management fee of 0.75%, this is not a sterling choice for bigger investors. In fact, bigger investors might consider the socially-responsible portfolio offerings of Wealthsimple.
Swell does put this fee into perspective, however. On their pricing page they put the investment cost in human terms:
The Swell Investing Robo Advisor gets a good score in terms of overall flexibility. We noticed a lack of diversification in the investment portfolios. However, Swell was quick to address that with the introduction of Swell Impact 400. This is a list of over 400 companies that are aligned with the United Nations Sustainable Development Goals (UNSDG.) All the companies in the Impact 400 list are the leaders in ethnic and gender diversity and are all rated with a high social and environmental impact. It also represents all stock market sectors to offer a more diversified impact investing experience.
We love the way the service gives investors the opportunity to choose from their specific areas of interest including the desired allocation for each portfolio. You can remove a maximum of three holdings from each portfolio and make specific changes (add back or remove certain holdings) anytime you prefer.
We also like the way Swell Investing allows small investors to invest in individual stocks or foreign stocks instead of the traditional ETFs or Exchange-Trade Funds.
But the biggest difference is your personal involvement in your investment activities. If you decide to give Swell Investing a try, you are essentially a direct shareholder in each of the companies in your portfolio. What this means is you are eligible to attend corporate meetings or vote on shareholder resolutions.
Swell Investing Performance by Portfolio
Despite Swell Investing’s relative high fees, you can’t deny their portfolio’s excellent performance. Here are Swell’s six primary portfolios and their historical performance. Click on the tabs across the top to switch portfolios:
Ease of Use
Swell Investing is easy to use. In fact, this fully automated investment service is perfect for hands-off or newbie investors. Upon signing up, you will need to enter your basic credentials including any current investment assets and your risk tolerance. The service will link to your savings or checking account so you can begin investing. Take note it might take a maximum of 8 days for your account to be fully activated.
If you prefer to remove or add certain holdings in your investment portfolios, you can do so anytime without thinking about trading fees. When it comes to ease of use, Swell Investing gets a high score.
Account Types and Services
Since Swell Investing is purely dedicated to impact investing or socially-responsible investors, it is foolish to expect a diversified number of account and investment types. The service still offers taxable, traditional IRA, SEP IRA, and Roth IRA accounts. Swell Investing is also offering Rollover Assistance which will help you turn your 410(k) retirement savings fund into an IRA.
But the most brilliant thing about Swell Investing are the socially-responsible stocks and ADRs including renewable energy, zero waste, green tech, healthy living, disease eradication, and clean water companies. The service also gives you the chance to invest from the Impact 400 list to diversify your holdings. Take note the service will allocate around 0.25% of your investment portfolio in cash. This cash allocation is reserved for payment of management or advisory fees.
The service also includes portfolio rebalancing and automatic deposits. But don’t expect 401(k) assistance, Smart Beta, or tax loss harvesting.
Swell Investing Video
Watch the video below to get a better idea of how Swell Investing works and what they’re about:
Suitability for Different Budgets
With a very low minimum deposit of $50, Swell Investing is great for both investors big or small. But the elephant in the room will have to be the high 0.75% management fee. For some, this is acceptable considering the chance to make a difference by investing your money on socially-responsible and environmentally friendly companies.
But for larger investors, the large fees along with the unavailability of tax loss harvesting will create a huge dent in their potential investment profits.
In our open letter to Swell Investing, we would suggest creating a drop in fees for larger accounts.
We like the idea of impact investing. We really give props to Swell for focusing 100% on being socially-responsible. What we don’t like are high management fees and a limited number of account types and services.
Even though Swell Investing is relatively new (the service was established in September of 2016), it offers investors a unique type of investment opportunity by putting your money strictly on socially responsible companies.
If the higher fees are worth it to you, especially with impactful companies and ethos becoming more and more popular (which we love) and Swell’s historically high rate of returns, we highly suggest Swell Investing.