Goldman Sachs recently unveiled its robo-advisor, Marcus Invest, which I’ll review in this article.
How does Marcus Invest compare to some of the other robo-advisors? And who should use Marcus Invest? Keep reading to find out.
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Marcus Invest Review: Quick Look
|Company Name||Marcus (Goldman Sachs)|
|Company Type||Investment and financial services company|
|Key Features||Customizable for a robo-advisor|
|Downsides||No track record|
|Best For||Investors who want guidance from a big-name company|
What Is Marcus Invest?
Goldman Sachs is a giant, diversified financial company famous for making millionaires out of its partners and for handling large IPOs. It has a reputation for working with the rich and powerful.
However, in just the last few years, Goldman Sachs started targeting everyday retail clients, first through Marcus by Goldman Sachs, which I reviewed as one of the best high-yield savings accounts. Marcus Invest launched in February 2021.
“Marcus Invest allows people to use Goldman Sachs’ incredible financial analysis and investment analysis to build a robo-investing portfolio using very low-cost funds,” money expert Clark Howard says. “If you asked somebody 10 years ago whether Goldman Sachs would ever provide investment advice to everyday ordinary people, they’d say, ‘You’re crazy. That will never happen.’”
Goldman Sachs is a little late to the robo-advisor party: Most banks and investment companies that could be considered competitors have been operating robo-advisors for at least a few years. But Marcus Invest’s offering is very similar to its competitors’ when it comes to the annual fee, minimum investment and the way its robo-advisor works.
How Does Marcus Invest Work?
You’ll start by answering questions on the Marcus Invest website about your investment timeline and the level of risk that you’re comfortable taking with your investments.
Marcus Invest will then ask you to choose between three investment strategies: Core, Impact and Smart Beta. All three let you choose the level of risk you want to take, from conservative to aggressive.
Core: According to Marcus Invest, this strategy is “for people who believe it’s hard to beat the market’s average returns an prefer to track market benchmarks.” You’ll invest in a mix of U.S. and international stocks and bonds.
Impact: If you’re interested in socially conscious investing, you’ll appreciate this option. Impact requires its underlying assets to meet certain environmental, social and governance criteria.
Smart Beta: This option purports to incorporate Goldman Sachs ETFs, which use models that invest more heavily into assets with high performance. (Marcus Invest limits this option to taxable accounts.)
Based on your answers and choices, Marcus Invest will recommend a pre-built portfolio, and the robo-advisor will rebalance it periodically to keep you within the desired allocation.
How Much Does Marcus Invest Cost?
Marcus Invest charges an annual fee of 0.35%, which is in the middle of the pack for the robo-advisors I’ve reviewed.
The company says it does refund some of its expense ratios for the portion of clients’ portfolios that are invested in Goldman Sachs ETFs. But since Marcus Invest is a new product, it’s hard to predict what we can expect in terms of average expense ratios.
The Marcus Invest website does say, though, that if you choose the Smart Beta investment strategy, you’ll pay higher expense ratios. It’s fair to assume that’s because those portfolios will be more actively managed.
Marcus Invest Review: Where It Shines
Here are some positives I’ve found about Marcus Invest.
- Affordable hands-off investing. Robo-advisors are terrific if you want “set it and forget it” investment advice for three or four times less than you’d pay the average full-service financial advisor.
- Quite customizable. Marcus Invest offers more than 50 pre-built portfolios. Clients also get to choose one of three different investing strategies. That’s extensive customization in the world of robo-advisors.
- Intriguing potential. As Clark alluded to, Goldman Sachs has a reputation for being sharp and exclusive financially. That’s a good indicator that the ETFs included in Marcus Invest portfolios will perform well.
- A welcome addition to the brand. The Marcus brand is expanding. It offers online savings, loans and investing. If you’re a fan of the Marcus brand and/or you use one of the other products, you’re probably happy to see its offerings continue to grow.
Marcus Invest Review: Where It Falls Short
Here are some negatives with Marcus Invest.
- No track record. Goldman Sachs itself has a track record, but Marcus Invest just launched in February 2021. It’s hard to suss out the potential negatives when reviewing the product at this stage, but there’s a degree of uncertainty around any robo-advisor without a history.
- Not suited for the price-conscious. The $1,000 minimum investment and 0.35% annual fee are higher than the offerings from many of Marcus Invest’s competitors. Clark always emphasizes the importance of low fees when it comes to long-term investing. If you’re especially price-conscious, you may want another option.
- Potentially high expense ratios. The Marcus Invest website explicitly says that the Smart Beta expense ratios could be high. Considering the 0.35% annual fee, about mid-range in price among robo-advisors, I would be surprised to see the average expense ratios for Marcus Invest’s lesser-priced investment strategies (“Core” and “Impact”) being any kind of bargain.
Who Should Use Marcus Invest
If you want help managing your investment portfolio but you don’t need other financial services, you probably don’t need to hire a financial advisor.
Marcus Invest is a good option (as are robo-advisors in general) if you’re in what Clark calls the “accumulation phase.”
That means you’re still many years away from retirement. You can wait to hire a professional to help you craft a financial retirement plan when you get a little further down the road.
It’s possible to manage your own investment portfolio. But if you’d rather hand it off to someone else and you want to try out a new robo-advisor that appears, from its initial marketing, that it’s willing to at least attempt better returns, Marcus Invest seems like a reasonable choice. According to Marcus Invest, its Smart Beta investment option intentionally pursues assets that overperform.
Other Robo-Advisor Options
Earlier this year, I researched and wrote about the eight best robo-advisors on the market.
Betterment is the original robo-advisor. Its annual fee is 0.25%, and its average expense ratio is just 0.09%, which is barely more than the most cost-friendly robo-advisor out there: Vanguard. In addition to cutting-edge financial planning tools and access to paid consultations with Certified Financial Planners, Betterment allows clients to create multiple portfolios dedicated to separate financial goals.
Wealthfront is more affordable than Marcus Invest with a 0.25% annual advisory fee and a $500 minimum deposit. It also features an advanced tax-loss harvesting strategy, customizable, user-friendly financial planning tools and a cash management account that pays 0.35% on your uninvested cash, among other benefits.
It will be interesting to see whether Marcus Invest’s Smart Beta offering can outperform the average robo-advisor by leveraging the company’s wealth (pun intended) of resources.
We’ll all learn more about the product in the coming months. But at least so far, Marcus Invest looks like a solid option for a robo-advisor. However, based on cost alone, there are slightly better choices available.