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Investing goes far beyond making money. You can actually help make lasting change through your investment choices. With socially responsible investing quickly growing in popularity, companies need to do more than just offer basic investments in order to get ahead of their competition.
Stackwell is attempting to battle a major social issue: the racial wage gap. They’re the first app of their kind to focus solely on Black investors. They keep fees low in order to give investors access to investments they may not be able to afford otherwise. Let’s take a look at the brand new robo advisor trying to make waves in the investing world.
The Short Version:
- Stackwell is a recently launched robo advisor that focuses their investing experience on the Black community.
- Stackwell creates your portfolio from various ETFs after you download the app and answer a short questionnaire.
- Through direct community funding and financial education, Stackwell truly gives back to Black communities in many cities across the country.
What Is Stackwell?
Stackwell is an online investment platform designed to help fight the racial wealth gap. Its tools are geared towards helping the Black community start investing. The company’s goal is to offer easy, very low-cost investment options that can help Black investors build their wealth.
They operate as a robo advisor, so your portfolio is hand-picked and managed by professionals. So there’s no need to pick individual stocks yourself. You tell Stackwell what your financial situation is like and how much you can contribute and Stackwell designs a portfolio for you.
Stackwell goes the extra step and also helps Black investors learn about the investing world and how to make it work for them. They routinely send you articles that can help you expand your knowledge.
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Financial Resources Designed for the Black Community
Stackwell offers inexpensive investments to Black investors, but their commitment to the community doesn’t stop there. They run financial literacy programs in cities where the racial wealth gap is most pronounced. They also offer scholarships and seeding accounts to Black students and businesses in these communities.
NBA & WNBA Partnerships
Stackwell has a unique partnership with teams in both the NBA and WNBA that allows them to invest in urban communities in parts of the country with historically high racial wage gaps. Stackwell has lofty goals for these partnerships. For one, they plan to start community-based programs in Detroit, Minneapolis, New Orleans, and D.C.
Additionally, these partnerships should open over 3,500 new and pre-seeded Stackwell accounts for investors. Plus, over $250,000 will be given back to local Black communities over the next few years. Finally, Stackwell also offers the NIL Student-Athlete Ambassador Program.
The Student-Athlete program provides financial literacy programs for 28 Black college athletes to help prepare them to manage their finances as potentially wealthy athletes. Additionally, this program provides these students with brand-building support, internships, and access to a large professional network.
How Does Stackwell Work?
Not only is Stackwell the only robo advisor focused on creating an investing experience geared towards the Black community, they’re the only robo advisor that gives back solely to the Black community.
Stackwell works in much the same way as other robo advisors. When you work with Stackwell, you’re opening an investment brokerage account, which means you’re working with a professional who can help you manage your investments. When you’re ready to register for an account, you’ll have to download the app, which is only currently available for iPhones.
Before getting started, you should know you’ll have a $1 monthly fee to use the app. Compared to other apps, this is a nominal fee.
You’ll Answer Questions About Your Financial Goals
Since the Stackwell robo advisor will be building your portfolio for you, the first thing you’ll need to do after downloading the app is answer some basic questions about your money goals.
Mainly, you’ll tell them what you’re looking to use your investment earnings for. You’ll find options like retirement, homebuying, starting a business, and paying off debt.
As with any investment app, you’ll also need an assortment of personal information, including:
- Your email
- Banking login info (for automatic investing)
- Your address
- Your SSN
- Your occupation
- Your income
The whole sign-up process takes barely over a minute, unless you have an issue connecting your bank.
You’ll be Recommended a Portfolio
After taking a few moments to answer Stackwell’s questions, you’ll be presented with the portfolio they think would work best for your goals. These portfolios will consist of low-cost ETFs composed of a diverse mix of stocks and other securities.
You’ll see the exact breakdown of your suggested portfolio, which you can access through your app’s dashboard. It’ll show you what percentages of your portfolio are in stocks, bonds, and other assets. You’ll have three portfolio options to choose from — Balanced, Moderate, and Aggressive — based on your risk tolerance. For new investors, a Balanced portfolio should work just fine, as it balances out your risk and earnings.
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You’ll Invest Monthly
If you like the portfolio Stackwell offers you, you’ll be required to invest a small amount monthly. You’ll have to at least commit to $10 each month, but this can help you grow your portfolio slowly until you’re more comfortable. You’ll also need to commit to the $1 monthly fee Stackwell charges, presumably to help manage your account.
You Get Regular Investing Resources
Stackwell doesn’t just stop connecting with you as soon as you pick your portfolio. Through app and text alerts, Stackwell sends you articles that can teach you the basics of investing so you can continue to grow your knowledge as your portfolio slowly grows. You can also access these financial resources right on your app dashboard, as you’ll see from the screenshot below:
Who Can Use Stackwell?
The whole purpose of Stackwell is to help the Black community have access to an investing platform that meets them where they are and understands the issues that prevent them from building wealth. That said, Stackwell makes it clear that anyone is free to join their community. They acknowledge that there are many communities that have long been left out of the investing world. Just do be aware that the Stackwell experience is designed specifically for Black investors.
With low fees and minimums, the app is also geared more toward those with little to no investing experience. It offers explanations in simple terms, and takes care of the hard parts for you. Experienced investors may need a bit more out of their investing app, but those just getting started should feel very welcome in the Stackwell community.
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My Take on Stackwell
They’re Truly the Only Robo Advisor Designed for the Black Community
While researching Stackwell, it became clear what their objective is: To provide a platform that helps educate Black investors while simultaneously offering a wealth-building opportunity. In the way they give back to the community, it’s clear they’re trying their best to do exactly this.
Not only is Stackwell the only robo advisor focused on creating an investing experience geared towards the Black community, they’re the only robo advisor that gives back solely to the Black community. Through their partnerships with the NBA and WNBA, they’re able to offer financial literacy education in many urban areas.
Their Investment Options Appear Similar to Other Robos
As for their investment options, it’s hard to gauge how they’re going to differentiate themselves from other robo advisors, especially those that focus heavily on SRI investing. Like many robo advisors, Stackwell builds your portfolio with ETFs. These are comprised of domestic and international stocks, bonds, and other securities. As Stackwell grows, I’m definitely interested to see how the investment options they offer grow, too.
Their Fees Are Middle-of-the-Road
Finally, I’ll end my thoughts on the fees Stackwell charges. You’ll be charged $1 each month for your account and you’ll need to invest at least $10 to get started.
At first glance, paying $12/yr to have your investments managed might not sound bad. But depending on your account size, you may be able to pay less with a robo-advisor that charges based on a percentage of assets under management (AUM) rather than a flat fee.
The AUM fees for Betterment and Wealthfront, for example, both start at 0.25%. With a 0.25% advisory fee, here’s what clients with different account balances would pay per year in actual dollars.
- $500 balance: $1.25/yr
- $1,000 balance: $2.50/yr
- $2,500 balance: $6.25/yr
- $5,000 balance: $12.50/yr
- $10,000 balance: $25/yr
As you can see, the 0.25% AUM fee is the better deal until your account balance reaches about $5,000. After that, the flat fee model becomes more attractive.
Honestly, since Stackwell’s goal is to make investing truly achievable for those from any economic background, I think I would prefer that they had chosen an AUM pricing structure. But as it stands now, investors with the smallest amounts available to initially invest will also be paying the high percentage in fees. With an invested balance of $500, for instance, your $12/yr subscription cost would equate to a whopping 2% annual fee.
To be fair, though, Stackwell’s pricing is lower than other investing apps that use a flat fee structure. For example, Acorns and Stash both start at $3/month.
While Stackwell looks like most other robo advisors in terms of portfolios, it has an underlying mission that’s different from all other robo advisor options.
Stackwell’s goal is to help end the racial wealth gap, and it does so by offering Black investors low fees, hands-off investing, and educational resources to build their investing knowledge.
Stackwell is a very new app as of right now, but they have a promising future. With over 3.5 million in funding, a growing team and clear-headed partnerships, it’s clear the company has potential to go above and beyond their goals.
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