Hedgeable: What You Need to Know About the Investment Platform
Hedgeable is an online investment platform that uses automated technology to give online customers the same tools that were previously only available to the wealthiest investors.
While it’s $1 minimum account balance requirement and smartphone app make it an appealing option for people just starting out with investing, its powerful tools are intended for people with slightly higher net worth, and its fee structure is a bit higher than other competitors in the field.
In this article we’ll do a deep dive into Hedgeable, explaining both how it works and what differentiates it from other online investment advisors. We’ll also look at the platform’s fee structure, and answer some commonly asked questions. By the end, you should have a deep understanding of what it offers and whether or not it’s the right tool for your online investing.
What Is Hedgeable?
Hedgeable is an online wealth management platform, which allows you to leverage a “robo-advisor” to make smarter decisions with your money. The company is a Registered Investment Advisor with the Securities and Exchange Commission (SEC).
Hedgeable, Inc. was launched in 2009 by co-founders (and twin brothers) Michael Kane and Matthew Kane. Their pitch was simple: Take tools that were previously only available to the highest of high-net-worth investors, and using technology, make those tools available to the rest of us.
The brothers had previously worked at some of the top investment firms in New York City, and understood that technology was headed toward a place where they could take the bespoke, specialized automated investing tools and make them available to anyone.
The company’s technology is built to protect users from massive stock market downturns, anticipating volatility and providing downside protection in the event of a recession or stock market collapse. The technology also allows you to build more sophisticated portfolios than typical online wealth management tools, letting you invest in both bitcoin and venture capital-funded startups.
Hedgeable also has a smartphone app so you can regularly check in on your money.
There is no account minimum to test out the service, but once you commit there is a fee structure, which we’ll cover in greater detail later in the article. Even when you do commit, however, the minimum account balance is only $1, always.
How Hedgeable Works
Hedgeable has a robo-advisor which guides clients through building an aggressive portfolio, and differs from other online portfolio advisors in that it takes a much more active role in portfolio management.
Most online robo-advisors — such as Wealthfront or Betterment — take a buy-and-hold approach that is built off what is known as the Modern Portfolio Theory. In simple terms, this theory can be explained as such: The way to build a responsible investing portfolio is to acquire assets that, combined, have an acceptable amount of growth potential and risk. Then, wait. Be patient. Over time, these assets should appreciate, and if the portfolio is diverse (it has enough different components to cancel out a bad investment if it loses value), investors can see healthy growth without too much risk.
Hedgeable’s robo-advisor doesn’t work like this. Instead, it takes a much more active role in managing portfolios. Hedgeable responds to market movements and responds quickly to shifts. While other robo-advisors take a patient approach, Hedgeable seeks to invest actively in bull markets and focus on downside protection in bear markets.
Basically: If things are going well, Hedgeable gets more aggressive. If the market takes a downturn, it gets more conservative.
Hedgeable starts by building your custom portfolio after you answer a series of questions. These can be as simple as asking about your risk tolerance or they can get as in-depth as you’d like.
The app doesn’t limit users to individual stocks or ETFs (Exchange Traded Funds). In addition, Hedgeable offers alternative investment options such as master limited partnerships, bitcoin, and private equity-funded startups. You’re also given the option to add many different account types to your portfolio, including:
- Retirement accounts such as ROTH IRAs
- Taxable accounts
- Business accounts and more
They also offer account aggregation services, helping you combine different existing accounts into larger accounts that can gain more earnings.
Who Should Use This Service?
Hedgeable’s robo-advisor is more customized, and more aggressive, meaning it conducts more trades than standard online financial advisor tools. Because of this, its fees can be a bit higher than other robo-advisor apps.
As such, the platform is typically marketed to people with larger balances who want a more bespoke and active approach to online financial management. If you are just looking to invest a couple hundred dollars and learn how the market works, Hedgeable probably isn’t the right service for you.
If you have a large retirement fund and want to make sure it’s growing at its full potential, and also want to be protected in the event of a market downturn, it could be a good app to use.
Hedgeable also gives you access to specialized investing practices such as tax-loss harvesting, which is the process of selling off a security that has experienced a loss, reporting that loss to the IRS, then acquiring a similar asset at a similar price.
In other words, instead of sitting and waiting for the market to come back up while your value is depreciated, you get to report a loss to the IRS, get a break on your taxes, and still maintain the same portfolio.
This is a common account management practice among the super wealthy, but just now becoming available to investors with less net worth.
Understanding the Fees
Hedgeable’s model has some of the highest fees of any online investing platform, but they do offer some of the most specialized services.
The company charges one annual fee that ranges from 0.3% to 0.75% of your total account balance annually. The tiered structure is based on account size. They don’t list publicly what account size will result in which fee, but you can enter your estimated account size on www.hedgeable.com/pricing to see what fee they will charge.
By entering in some numbers, you will find that accounts up to $50,000 are charged the 0.75% fee, and as the account grows from there, the fee is reduced incrementally up to $1 million, where everything after that is charged the 0.3% annual fee.
As you can see, the service is designed for higher net worth individuals, but still gives anyone access to tools that were, in the past, only accessible to people who had enormous wealth.
That being said, the fees aren’t prohibitive — a $1,000 account balance will have an annual fee of $75, or $6.25 a month — and the fees you’ll pay will still most likely be less than those charged by human advisors (some of whom use Hedgeable technology).
Studies found the average real-person advisor charges around a 1% annual fee, with the number skewing higher for those with lower balances. Hedgeable’s maximum fee is less than that.
Frequently Asked Questions
1. How am I billed for using Hedgeable?
You’ll be billed monthly on a prorated fee system that accurately reflects the current state of your account. So, if you unfortunately lose a bit of money with Hedgeable, they will charge you less that month to reflect the state of your account. They don’t allow you to pay annually ahead of time, and the charge is deducted directly from your account each month.
2. How are Hedgeable reviews?
SmartAsset probably has the most comprehensive review of Hedgeable right now. They note that the company strives to be inclusive with its $1 minimum account balance, but that it’s still better suited for people with higher account balances. They also note the one major downside: The platform doesn’t currently allow for college savings plans, or 529s, so you would need to go to another service to take advantage of a plan like that.
3. Where can I learn more about the Hedgeable investment strategy?
Hedgeable’s founders and employees have written a series of white papers explaining their investment philosophy and giving more in-depth details about the tools they have built. They also have a blog where they keep users informed about where they see the market heading and how the company is adapting to changes every day.
Manage Your Money Now
While other robo-advisors seek to set up your portfolio in a safe way, and then encourage patience, Hedgeable takes a much more active role in your wealth management, seeking to react quickly to market shifts and protecting your money when things start to turn south.
For higher net worth individuals, this kind of attention may be worth the slightly higher fees that the platform charges. That said, if you have smaller account balances, you may also want to use a tool like Hedgeable, as it’s still more affordable than many human advisors.
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