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Swell Investment (or simply “Swell”) is tapping into a niche market by investing in sustainable, responsible, and impact (SRI) stocks only. Due to the fact that it is an SRI-only advisor, the fees are a lot higher than most investment advisors. At 0.75%, they are three times more expensive than the industry standard. This Swell review will investigate if these fees are really worth it or not.
One of the most socially responsible robo-advisors on the market.
Low Minimum Investment
Investors only need $50 to get started with Swell.
Invests in Individual Stocks
Swell investors are shareholders of individual stocks, and can attend meetings.
Tax lot ordering
While lacking tax-loss harvesting, Swell uses tax lot ordering to reduce taxes.
Very High Fees
Fees are three times higher than the industry standard.
Limited Accounts Supported
Only supports IRA accounts and taxable accounts, and you cannot invest beyond the SRI sector.
No Tax-Loss Harvesting
The popular tax-loss harvesting feature is not available. This might deter many high net worth investors.
Swell offers a new approach to investing that could be quite popular, but the high fees will deter all except SRI focused and novice investors
How Does Swell Work?
Unlike the vast majority of robo-advisors, you don’t have to fill out a questionnaire with Swell to judge your risk tolerance. You choose from a mix of portfolios and how much you want to allocate to each. This allows the individual a lot more control over the process.
Swell invests in individual stocks instead of ETFs. Every portfolio has between 37 - 68 individual securities. This is a significant department from the way that other robo-advisors operate. With Swell, you can also exclude up to 3 stocks from a portfolio if you choose.
Commissions & Fees
The fees with Swell are definitely higher than other robo-advisors. This comes with the territory, as SRI stocks and funds are nearly always more expensive. But at least there are no added fees with this robo-advisor. The 0.75% management fee is all inclusive. Most other robo-advisors have a lower management fee, but they offer ETFs which come with expense ratios of between 0.07% - 0.15%. These figures can add up.
Swell is a niche robo-advisor, so the increased fees are to be expected. There are no trading commissions with Swell. There is the standard Self Regulatory Organization fee that is always charged by brokerages for the purpose of executing transactions. This fee is typically less than 0.02%. There are no fees for closing a Swell account and it can be done in as little as 7 days, which is quite impressive by robo-advisor standards.
Platform & Tools
The Swell platform is extremely user-friendly and intuitive. It allows clients to invest in a variety of different sectors, which include renewable energy, green technology, clean water, disease treatment, healthy living, waste management, and impact companies.
Within the area of SRI stocks, there is an impressive amount of flexibility, with over 700 companies vetted for profitability and socially responsible investing. It is easy to set up an account and choose from 6 portfolios. The tools are not overly sophisticated and it is a simple and transparent platform for SRI stocks.
Swell only has an application for iOS, not for Android. It is rated 4.5 stars on the iOS store at the time of this writing, but from a very small number of reviews. Swell is a niche and small robo-advisor in comparison to some of the bigger platforms, such as Betterment or Wealthfront.
The application is still relatively new to the market and it will be a while for some more information to come through. But so far, the reviews have been positive and the application is functioning smoothly. The application can be used to view the portfolio performance and transfer money between accounts.
Deposits & Withdrawals
When first depositing with Swell, it can take between 4 - 8 days for the account to be fully activated, which is a little longer than comparable platforms. Only savings and checking accounts can be linked. You can withdraw from a retirement account through Swell, but you need to contact them first. This is because the IRS has a series of rules with regard to withdrawing from an account before the age of 59.
It is much easier to withdraw from regular Swell accounts. You can withdraw from either the available cash deposit or the ‘Swell Mix’. Dividends and interest income are automatically allocated to the Swell cash account.
The customer experience with Swell is positive, especially among millennials. This can be attributed to the socially driven ethos of the platform and its focus on high-quality responsible companies. The fact that it is transparent also helps. Even though it is expensive, customers are willing to pay the extra price once they know that their money is going to the stocks that deserve them. As an added bonus, the platform is very easy to use for novice investors.
Swell is available by email or call, though there is no live chat option. They have a responsive customer support team and also offer a knowledge base of commonly asked questions, like all robo-advisors.
Security & Reliability
Your cash and securities are definitely secure with Swell. Swell uses Folio Investing as the third-party custodian for all assets. Folio Investing is an SEC-registered broker-dealer that is a member of SIPC. This means that your securities are insured up to $500,000. They are also a member of FINRA. Swell is an SEC-registered investment advisor.
Swell keeps 0.25% of each portfolio allocation in cash which is FDIC insured up to $250,000. In other words, Swell is fully insured and regulated. In addition, Swell is funded and incubated by Pacific Life, a financial services provider that is more than 150 years old. They have got strong backing. They also use bank-grade security with AES 256 bit encryption for all communications.