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Key Features, Pros, Cons & Overall Ratings

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There’s an idea in science that offspring are enhanced as a result of mixing the genetic contributions of their parents. Those seeking an investment advisor that “hybridizes” the personal relationship of an investment advisor with the technological conveniences of a robo advisor, high-touch, and high-tech will find Farther Finance a superior and affordable choice for investment advisory services. This is our Farther Finance review.

Commission and Fees – 9

Ease of Use – 9

Tools and Resources – 8

Investment Options – 5

Account Options – 7

7.5

Overall

Farther Finance, founded in 2019, is a registered investment advisor, not a broker-dealer. Their focus is to redefine wealth management by merging technology with expert financial advisors.

Sign up with Farther Finance

What Is Farther Finance? 

Farther Finance provides investment advice with what I would call a “visualizer”: an astonishingly simple set of tools to track and view your entire financial life. The firm’s sole aim is to increase your wealth — the idea behind the name is helping you go farther towards meeting your financial goals. In fact, Farther Finance doesn’t even hold custody of your securities.

Farther Finance also offers expertise with equity compensation (RSUs, ISOs, NQSOs), a subject that perplexes most of us, as well as home buying and retirement.

How Does Farther Work?

You can begin by using the “take a tour” function on Farther Finance’s website, and then schedule a conversation with one of their advisors. The demo will show you the whole program in less than ten minutes. You can then ask an advisor questions specific to your assets. After you sign up, the advisor’s role is to tailor the program to your assets via a financial plan and set you up on their secure yet password-free platform. Instead of logging in with a password, you enter your email and then click on the link they send you.

Farther Financial advisors think in terms of buckets of your specific goals (for example: vacation, education, home, retirement, etc.). The advisor will develop your plan around these buckets, and review it with you. You don’t have to “do” anything; they handle the set up and will make sure you’re comfortable on their platform.

Although you are giving the advisor discretion over your account, you are not relinquishing full control. You can set the parameters and choose if you want to use the automation features (such as rebalancing, waterfalls and tax loss harvesting) and you can consult your dedicated advisor as often as you would like.

Farther Finance Features Overview

Because of their simplicity, ease of use, and intuitive imagery, Farther’s tools look and feel like they were designed by Apple. The final effect is that it is much easier to view, monitor, and manage the many moving parts that comprise your assets. There is even a section where you can store copies of important documents such as wills, leases, titles, and deeds. Here are some of the best features that Farther offers:

Dedicated Financial Advisor

If having a personal relationship with an advisor makes a difference for you, Farther Finance is one of the most affordable ways to capture the benefit. Most other robo advisors, and even hybrid financial advisors, provide limited access to a team of advisors. While a team is still helpful, it’s not the same as an advisor who has designed and built, and is now executing, your financial master plan with you. You meet with your advisor at least quarterly, or as often as you like, and your access is unlimited.Farther advisors

Tax Optimization

By investing in tax-efficient ETFs and tax-loss harvesting (matching losses with gains to minimize short-term gains taxes) Farther Finance may identify opportunities to reduce your tax liabilities or increase the size of your tax refunds from your investments.

Dashboard

After you decide to sign up, Farther Finance will set up a dashboard (called “family view”) that consolidates all of your financial assets in one place. For this reason, the service is often described as offering a holistic view of your financial health. You will have to link your accounts outside the Farther Finance system in order to capture the benefits of their cash sweeps and waterfall techniques, but this is well worth the few minutes of input per account.

Dashboard

 

Rebalancing

Farther Finance’s rebalancing tool helps make sure your portfolio is correctly allocated. So it will sell positions that have increased in value in order to purchase positions that have decreased value. You can decide to do this daily, monthly, quarterly, annually, or “on demand.” In practice, this means you are buying low and selling high when you are rebalancing.

Enhanced Digital Security

Father Finance uses bank-level 256-bit SSL/TLS encryption, and the same types of servers deployed by Capital One and the US Department of Defense. And there are no passwords to remember with Farther. Each time you go to your account website, you are sent an email that will access your account (a variant on two-factor authentication for the memory-challenged.)

Waterfall

A “waterfall” feature permits you to allocate a percentage of each savings dollar to different goals, or fulfill them in sequence. For example, after your annual retirement savings is complete, the next savings dollar goes into your vacation fund, and so on. Investors set parameters and do give their advisors discretion. In practice, this arrangement is much closer to “cruise control” than “auto-pilot,” with investors benefiting from the discipline of steady execution of their strategy over time. According to Vanguard’s 2019 study, taking this kind of disciplined approach may add as much as three percentage points of return per year over the DIY investors’ returns.

Where Are My Investments Held When I Use Farther Finance?

Your funds and securities are held by Apex Clearing Corporation, a NYSE member firm, and are insured up to $500,000 per account by SIPC. You own the securities in your account, not Farther Finance. If you change your mind about using Farther Finance, or in the unlikely event of their collapse, the custody of your funds and securities are with Apex.

What Are the Fees?

There is a $100,000 minimum investment to use Farther. After that, the fees are as follows:

Amount Fee (AUM)
First $2.5 million 0.80%
On the next $2.5 million 0.65%
On the next $2.5 million 0.50%
More than $10 million 0.35%

So for example, if you invest $100,000, you would be charged $800 per year, billed in monthly installments of $66.67. That’s a lot lower than you would pay with most other full-service registered investment advisors, which usually charge between 1% and 2% of AUM. Pure robo advisors charge on average 0.25%.

Fees Breakdown

Why Choose an Investment Advisor Over a Broker? 

Because Farther Finance charges a flat fee of 0.8% on the first $2.5 million of your assets under management, and no other fees, the firm makes the lion’s share of its money by increasing the size of your assets. Their financial interests and yours align closely.

Unlike a broker-dealer, Farther Finance does not underwrite loans, checking accounts or investment products, nor do its advisors collect commissions from the sale of securities. An important perspective is that there are fewer conflicts of interest influencing their investment advisors’ recommendations.

Fans of behavioral economics take note: Farther Finance’s advisors, like all registered investment advisors, are governed by fiduciary standards. This means they are legally obliged to develop plans and choose the investments that are in your best interest. Brokers (registered representatives) are governed by suitability standards; they are transaction-based service providers for whom financial planning is not required.

On the other hand, Farther Finance’s advisors, like most money managers, have full discretion over your account (the advisor may buy and sell within your parameters without consulting you on each transaction), whereas you may give or withhold discretion from a regular broker.

What Kinds of Securities Does Farther Finance Recommend?

There are no predetermined portfolios to choose from, but the portfolios you design with your advisor will likely consist of exchange-traded funds (ETFs). Farther has a partnership with BlackRock, which means many of their underlying ETFs are supplied by BlackRock. However, Farther is not obligated to use BlackRock’s funds and may use other alternative investments.

Can I Place My Non-Farther Accounts on the Platform?

Yes, but only to monitor them. You cannot control outside accounts from the Farther Finance platform. There is a great advantage to having all your accounts monitored in one place. You can quickly know, for example, how much cash there is in all of your accounts, without having to log in and out of several institutions. It will also help you make better decisions about risk. Imagine that you own high technology stocks at an outside firm; you may wish to diversify into another category at Farther so that your whole portfolio is balanced. This goes for any other type of financial asset.

You may also transfer any existing accounts you have, and Farther will manage them “as is.” If you own individual stocks and bonds at an outside firm but decide you want just one manager, you may transfer the account to Farther, and they will manage those securities for you.

Can I Trade Crypto and NFTs on the Farther Platform?

No, but you can monitor your accounts at places like Coinbase, Kraken, and Gemini.

Father Finance Pros & Cons

Pros

  • Great value proposition: Farther is less expensive and offers more robust technological tools than traditional advisory firms.
  • Unlimited access to a dedicated investment advisor: Access to a dedicated professional can be comforting to investors at every level.
  • Your interests come first: Farther’s advisors are all fiduciaries and are legally bound to have your best interests in mind.
  • Holistic view: Your entire financial picture is in one place, regardless of where your assets are held.

Cons

  • Pricing: Farther is significantly more expensive than a robo advisor.
  • Limited access to newer financial products: Farther does not offer insurance products, margin, cryptocurrencies, options or even a checking account.
  • Limited history as a firm: Farther Finance was founded in 2019, and does not have the lengthy track record of performance in good markets and bad that some competitors do.

The Bottom Line: Does Father Finance Worth It?

For well-to-do investors seeking the comfort of a trusted financial advisor with the conveniences afforded by modern technology, there is no better value than Farther Financial. But for those who like to manage their own affairs or those who are uncomfortable with giving discretion over their accounts to advisors, a robo advisor is a less expensive alternative.

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