- Review: Aspiration
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Founded in 2014 and based in Marina Del Rey, Calif., Aspiration is a different kind of robo-advisor. The organization sees itself as less a company and more a community.
What sets Aspiration apart is the belief that people are just as important as profits. In that regard, they make “elite” investments available to ordinary investors and have a company philosophy of treating customers like partners.
They offer investments centered on funds that invest in companies that operate in ways that are sustainable and environmentally friendly and that provide fair employee practices. Their position is that such businesses represent true long-term growth opportunities, more so than those that are driven primarily by profits.
They also enable you to direct 10% of your fees toward various charitable groups that work more directly in those areas.
But one of the most interesting features of the platform is that you have the ability to choose how much you want to pay in investment fees. Theoretically, you could pay zero. But Aspiration is betting you won’t make that choice. They believe you will determine that the services they provide justify a fee, as well as your interest in advancing sustainable causes.
How Does Aspiration Work?
Apart from Aspiration’s pay-what-you-will fee structure, its orientation toward socially responsible causes is probably what most sets it apart from other investment platforms.
They have partnered with Bright Funds to develop a set of investment options they loosely refer to as “funds.” These are not to be confused with the actual funds you will invest your money in. They are actually groups of nonprofit organizations that are working toward common goals.
The 10% of your investment fees that you allocate to social responsibility causes is contributed toward one or more of these “funds.” There are six, and they provide you with an opportunity to direct some of your fees, as well as additional contributions, into any that you choose, or all six. Your contributions are 100% tax-deductible.
The six “funds” include the Global Poverty Fund, Water Fund, Education Fund, Environment Fund, Health Fund and Human Rights Fund. You can also choose the Aspiration Opportunity Fund.
The Aspiration Opportunity Fund is particularly interesting because of its economic angle. Its giving partner is Accion, the largest nonprofit provider of microloans in the US. It’s purpose is to provide microloans of $5,000 and less, plus mentorship and support, to struggling Americans looking to start a new small business that will provide a better life for themselves and their families.
Funding your Aspiration account. You must link a bank account to your Aspiration account, which will enable you to transfer money in and out of your account. You can also use a credit or debit card to pay your fee to Aspiration and to make additional charitable contributions.
Aspiration has also created the StrengthBuilder tool that enables you to create a flexible, personalized, automated investment plan. You can set up recurring investments during the signup process, or use the tool at a later date.
Aspiration Features and Pricing
|Account Fees||No set fees|
|Accounts Available||Traditional IRA, Rollover IRA, and Individual|
|Customer Service||Phone and Live Chat — M-F 8A-5P; S-S 11A-1P ET, Email — 24/7|
ETFs available — Aspiration invests your money in two funds:
Redwood Fund (REDWX). This is a fund that has the goal of investing in companies whose sustainable, environmental, and employee practices result in their being poised for growth. They are considered part of the sustainable investing category of funds.
This fund analyzes companies’ sustainable environmental, workplace, and governance practices to find investments they believe to be poised for growth. They believe companies that adopt significant environmental, employee, and governance policies grow faster than those that don’t. There are no fees attached to this fund other than operating fees paid to third parties, and those are limited to 0.50%. The fund has a $500 minimum investment.
Flagship Fund (ASPFX). This is a mutual that has a goal of long-term growth with less volatility than the stock market. Fund volatility is reduced by including “liquid alternative” investments in addition to stocks. It comprises mutual funds and exchange traded funds.
Like the Redwood Fund, there are no fees attached to this fund other than operating fees paid to third parties, which again are limited to 0.50%. The fund has a $500 minimum investment. It’s categorized as a “multialternative” fund.
Clearing agency — The account is actually held with UMB Financial Services, Inc. UMB has been ranked by Forbes as one of the best banks in America. Aspiration never has access to your cash and merely executes your instructions for deposit or withdrawal from your account.
Annual fees/cost — Aspiration uses a “Pay What Is Fair” approach to fees, which makes them virtually unique in the entire investment universe. It means you as the investor will determine the investment fees you pay for the management of your account. And yes, you can even choose to pay zero fees.
But Aspiration believes the investor-driven fee structure will provide them with an incentive to work harder for you and to live up to their mission. They believe you will recognize that value and set your investment fee accordingly. They also believe your motivation toward socially responsible investing will have you willingly paying a fee.
You can select a fee you think is fair as a percentage of the money you have invested. 10% of that amount will be given to the charitable funds. You can also select a monthly fee to be charged on your Aspiration checking account, which can be between $0 and $6. And you can change the fees you pay anytime.
Aspiration Summit Account — Aspiration provides this as a high-yield checking account offering 1.00% APY. There are no required monthly service fees, and you will have free access to any ATM in the world with your debit card.
Aspiration is making this account available by partnering with Radius Bank. It is a fully FDIC-insured financial institution that holds the assets you deposit in your Summit Account. Headquartered in Boston, Mass., Radius Bank is a community bank that was founded in 1987 and has assets of more than $725 million.
Summit Account holders can make cash or check deposits at specific ATMs within the NYCE Network. They vow you will never again pay an ATM fee. If you are charged a fee at the time of an ATM withdrawal, it will be refunded through an “ATM Fee Rebate.”
Integration with Mint.com — Your Aspiration Summit checking account can be integrated with Mint.com.
Account protection — Your investments are protected by SIPC insurance provided by UMB. FDIC coverage is provided for bank deposits through Radius Bank.
Aspiration Mobile App
Aspiration does not currently offer a mobile app, but it is in the works. Stay tuned.
- No set fees — You determine how much to pay.
- Low account minimums — It takes just $10 to open a checking account and zero to open an investment account.
- Socially responsible investments — Aspiration may be the only investment platform dedicated specifically to socially responsible investments.
- No-fee banking — Aspiration lets you access cash through any ATM in the world without fees.
- Limited investment selection — There are only two investment fund options available.
- Limited account types — Aspiration offers no Roth IRA or joint accounts yet.
- No mobile app
The very limited investment selection is the major negative factor. Otherwise, this service is a real investment alternative for investors who want to concentrate on socially responsible investing. The free checking service and the low minimum initial deposit requirements are definite strengths.