In their own words, Farther isn’t an investment company, a bank, or an insurance company. Instead, in the pursuit of becoming a complete digital financial advisor, they’re a blend of all three. In our review of Farther, we’re going to take a look at how they focus on growing your wealth – not just managing your money.
Farther knows that the older you get, the more responsibility you have financially. As a young adult, you most likely only have to worry about immediate bills, such as car payments, student loans, and general costs of living. But as you get older, you’ll have to incorporate investing, insurance, taxes, retirement planning, and bigger concerns such as buying a home into your plan. This growing number of moving pieces can make it feel impossible to manage everything on your plate.
Enter Farther. This New York City-based company wants to be your “co-pilot” in handling any financial challenges that come your way. And, though they only have a small team of about 15 people, they want to help you go after the bigger goals in life.
Before we continue, Financial Professional wants to remind you that this review is informational in nature and does not constitute investing advice. Although we may receive financial compensation (at no cost to you) from affiliate links in our reviews, our opinions are our own.
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One of the driving theories behind Farther is that your financial decisions should be goal-oriented. For instance, they acknowledge that many individuals share common goal milestones in their lives, such as saving up for a down payment on a house, tucking away a college fund for their children, and minimizing their annual tax payment.
Farther also believes that you should approach these financial goals with different strategies in mind. After all, the process of saving for retirement is often much different than saving for a house.
Plus, as your life changes, your goals will, too. As you age, you’ll have to consider how to best protect your assets, designate your beneficiaries, and offer charitable contributions. These steps are no less important than those you take early on.
Thus, in more ways than one, Farther works like a digital financial advisor to help you meet these goals. They work by pairing you with an actual financial advisor along with proprietary technology to guide you along the way. They claim to “harness the power of technology to get you more out of your money.”
To meet these promises, Farther offers services such as:
When you speak to a Farther representative, they will help you create a detailed financial plan using these tools. The goal is to put you in the best position to meet your milestones head-on. To do this, they will help you allocate funds to different portfolios suited for each goal. And, because they’re able to help with more than one kind of planning, they encourage you to call and ask questions anytime.
Despite their hands-on style of service, Farther is relatively cheap. There is no fee or minimum investment to sign up. Instead, they charge a 0.8% annual fee for assets under management (AUM). This is more than the cost of a robo-advisor, such as Betterment, but less than the cost of a traditional financial advisor.
Furthermore, Farther includes in their marketing that they have no hidden fees or pushy salespeople – just simple, transparent pricing. Additionally, their salespeople don’t work on commission, so you don’t have to worry about being goaded into choices you don’t want to make.
For more on Farther’s fees, take a look at the chart below, or head on over to their website.
When it comes to financial tools, there are pros and cons to every platform. Usually, the benefits of a financial platform depend on what you are looking for, as well as how it helps you reach your financial goals.
That said, let’s review the pros and cons of Farther.
Guidance: Farther is one of the better tools if you’re looking for financial guidance, rather than a plug-n-play robo-advisor. Instead of navigating an app alone, they pair you with an actual financial advisor. Plus, they have tools to help you beyond investing, such as with taxes, estate planning, budgeting, and more. And if you don’t want to speak with an advisor in-person, you can take advantage of their blog.
Tax advantages: Farther makes a point of breaking down your investments according to your financial goals. At the same time, they’re able to recommend the best tax-advantaged account to use for each goal. For example, you can save tons in taxes by using an IRA (individual retirement account) instead of a traditional investment account. Farther will help you identify the best strategies – such as this one – to be the most tax-efficient.
Combined platforms: Apart from offering financial advice, Farther also allows you to combine other services, so all your needs are met in one room.
Potential for higher returns: According to Farther’s research, partnering with a financial advisor can potentially lead to 3% higher returns than going it alone.
Cost: Considering the hands-on nature of Farther’s strategy, their service is quite cheap. They aim to bring you the tools typically reserved for the ultra-wealthy at a fraction of the price.
Limited value added: If you’re someone with a good grip on your finances and don’t feel the urge to speak to a financial advisor, Farther may not have much to offer you. They don’t allow you to invest your own money, and they don’t provide banking, lending, or saving tools.
Online services may not meet your personal needs: If you are looking for access to a financial advisor, you may consider looking local and in-person first. While the services may be nearly identical, some people prefer the literal hands-on approach, instead.
Farther advertises that working with a financial advisor can improve your investment returns by as much as 3%. However, this is a general statistic and is not personal to Farther’s platform. They also note that people who work with a financial advisor feel happier with their life and are twice as likely to feel financially secure.
That said, just because you are working with a professional does not mean you’re immune to losses.
Even though working with a financial professional can provide additional peace of mind, there are risks inherent to all forms of investing. Sometimes, the know-how and experience of a trained individual can offset risks of which you’re unaware. But, like how hiring a professional driver does not remove all risk of being in a car crash, hiring a professional financial advisor does not remove all risk of losing your investment.
This is due to the nature of investing itself. A professional advisor is going to invest your funds in assets such as stocks, bonds, and real estate – all of which fluctuate in value. Since it’s impossible to be 100% certain an asset will move in your desired direction, it’s always risky to invest in one.
That said, you can adjust your investing strategy based on your risk tolerance. This is something a Farther financial advisor will discuss with you prior to making any decisions.
Overall, Farther is a great tool for someone who feels unprepared to manage their finances or has more wealth than they are comfortable handling alone. For instance, if you suddenly come into a large windfall of cash, or have variable sources of income, you may benefit more from Farther. It’s also a suitable platform if you desire personalized financial backup or advice.
Farther seeks to serve the in-between of the ultra-wealthy and the average investor. In their own words, “When you get to the point where bad decisions can cost you hundreds of thousands of dollars or more, it’s time to graduate from robo-advisors and other DIY solutions.”
However, if you are someone who does not have a lot of wealth to manage and only requires a basic investing service, there are probably more useful options to explore.
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