This article explains how Alinea’s Automated Investing works: how you are assigned a model portfolio, how it is rebalanced, and what role Allie, Alinea’s AI assistant, plays. All investing involves risk, including loss of principal.

What Automated Investing Is

Many new investors assume that automated investing means giving up all control, or that it takes significant capital. Automated investing does mean that a portfolio is assigned and maintained by an algorithm rather than chosen by you security by security. With Alinea, you stay in control of whether to invest, how much, when to change your answers, and when to withdraw.

Automated Investing is an account type on Alinea. It is similar to what the SEC calls a robo-adviser: an automated digital investment advisory program that collects information about you through an online questionnaire and creates and manages a portfolio based on your answers [1].

Getting Started

Alinea’s Automated Investing begins with a questionnaire. You answer questions about your risk tolerance. Based on a calculation, Alinea assigns you one of four risk-based model portfolios: low, moderate, high, or hyper.

To fund your account, link your bank account and make a deposit. Bank accounts are linked through Plaid, Inc., a third party not affiliated with Alinea, and we do not store your online banking credentials.

How the Model Portfolios Work

Each risk level maps to a model portfolio built from funds that hold a mix of ETFs, each with target weights. These portfolios are the same for every investor at that risk level. They are assigned to you by algorithm based on your questionnaire answers, and they are not built individually for you. The ETFs in the portfolios do not change on their own, and Alinea reviews them quarterly.

A robo-adviser’s recommendation is limited by the information it asks for and receives from you [1]. Alinea’s assignment relies on your questionnaire answers, so it is important to keep them accurate and up to date. A diversified mix of ETFs can reduce the impact of any single investment falling, but diversification can’t guarantee against loss [2].

The Role of Allie

Allie is Alinea’s built-in AI assistant. It can explain your holdings, balances, and performance in plain language, look up prices and charts, and share market briefings and lessons. At your request, Allie can also start a deposit, withdrawal, buy, or sell, and you confirm every transaction before it runs. Allie does not manage or adjust your Automated Investing portfolio, does not provide investment advice or recommendations, and can make mistakes.

How Rebalancing Works

Over time, market movements can cause your holdings to drift from the portfolio’s target weights. Each month, Alinea reviews your holdings and trades them back toward the targets when an allocation drifts more than 3% from its target. Idle cash can be used to buy positions that are below target. Rebalancing involves buying and selling, which can have tax implications depending on the type of account [1]. Rebalancing does not assure a profit or protect against loss.

Security and Regulation

Alinea Invest, Inc. offers a mobile investing app. Investment advisory services are provided by Alinea Advisory Services LLC, an SEC-registered investment adviser and a wholly owned subsidiary of Alinea Invest, Inc. SEC registration does not imply a certain level of skill or training.

Brokerage accounts are held at DriveWealth LLC, member FINRA/SIPC, which is not affiliated with Alinea. SIPC protects securities customers of its members up to $500,000 (including $250,000 for claims for cash) if the brokerage firm fails financially. It does not protect against a decline in the market value of your securities [3]. Bank accounts are linked through Plaid, Inc., a third party not affiliated with Alinea, and we do not store your online banking credentials. SSL and 256-bit encryption help protect your data.

You must be 18 or older and a U.S. citizen, permanent resident, or holder of certain visa types.

Common Pitfalls

• Not updating your answers. Your goals and circumstances can change. If they do, review your questionnaire answers so the portfolio you are assigned still reflects them.
• Unrealistic expectations. Markets fluctuate, and returns are not guaranteed. Automation helps maintain a consistent approach, but it does not remove risk.
• Treating Allie as an adviser. Allie provides educational information and can be wrong. It does not tell you what to buy or sell.

Getting More From Automated Investing

Check your portfolio periodically, use Allie to ask questions about what you own, and review your questionnaire answers when your income, expenses, or life events change. Consider your goals and time horizon before making changes.

Frequently Asked Questions

What is Alinea’s Automated Investing?

Automated Investing is an Alinea account type. You answer questions about your risk tolerance, and Alinea assigns you one of four risk-based model portfolios of ETFs and rebalances it monthly.

How long does it take to set up an account?

Setup times vary. You complete the questionnaire, verify your identity, and link a bank in the app. Your first deposit can take several business days to settle.

Is Automated Investing right for beginners?

Automated Investing is designed to be usable without prior investing experience, because the portfolio is assigned for you. Whether it is suitable depends on your goals, time horizon, and risk tolerance, and you can lose some or all of your investment.

Is the portfolio personalized to me?

Your questionnaire answers determine which of the four model portfolios you are assigned. The portfolios themselves are the same for everyone at that risk level.

Does Allie give market insights?

Allie can summarize market news and explain what is happening in your account, for educational purposes. It does not provide investment advice or recommendations, and it does not change your portfolio.

Disclosure

Advisory services are provided by Alinea Advisory Services LLC, an SEC-registered investment adviser and a wholly owned subsidiary of Alinea Invest, Inc. SEC registration does not imply a certain level of skill or training. Brokerage and custody services are provided by DriveWealth LLC, an unaffiliated registered broker-dealer and member of FINRA/SIPC.

This content is for informational purposes only and is not an offer, solicitation, or recommendation to buy or sell any security. All investing involves risk, including loss of principal. Past performance does not guarantee future results. Allie is educational only, does not provide investment advice, and can make mistakes. Alinea is not affiliated with the sources listed below, and their inclusion is not an endorsement. Alinea charges a subscription fee for its advisory services; see Item 5 of Form ADV Part 2A. Alinea’s support team handles questions about using the service only and does not provide investment advice.

See our Form ADV Part 2A, Wrap Program Brochure, and Form CRS at www.alinea-invest.com/legal/home. For more on Allie, see AI Allie – Disclosures & Terms of Use at www.alinea-invest.com/legal/ai-allie-disclosures-terms-of-use.

Sources

[1] U.S. Securities and Exchange Commission, Office of Investor Education and Advocacy, Investor Bulletin: Robo-Advisers, February 23, 2017 (investor.gov).

[2] U.S. Securities and Exchange Commission, Investor.gov, “Diversify Your Investments.”

[3] Securities Investor Protection Corporation (SIPC), What SIPC Protects (sipc.org).

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