Review of the Twine App

Twine is a fintech platform provided by John Hancock, a financial services firm that dates back to 1862. But just because a firm has a long history doesn’t mean it necessarily offers the best product.

Twine offers a cash management account with a low APY, slow transfers and relatively high management fees if you open an additional taxable investing account. Its cash management account is administered by a clearinghouse rather than a bank, making the reliability of Federal Deposit Insurance Corp. (FDIC) coverage precarious under certain circumstances.

While the Twine app does offer a functionality for couples or partners to invest toward the same goal, there is not much joint account functionality beyond that. There are apps that allow couples to plan their joint finances holistically, but Twine isn’t one of them.

What is Twine?

Twine is an investing app that also offers a cash management account. This account is known as a Cash Account. It does offer a higher APY than a typical savings account, but it is not competitive with similar cash management account options.

Twine gives partners, friends or any two individuals the ability to build joint savings and investing goals. It can take up to five business days to transfer money into your account, making it an app for planning ahead rather than acting in the moment.

Twine cash savings account

Twine, which launched in late 2017, is owned by John Hancock Personal Financial Services, LLC. However, John Hancock outsources the administration of its Cash Account to Apex Clearing Corporation.

Getting money into and out of this account can be difficult. When you deposit money, there could be a holding period of up to five business days. When you withdraw money, it can take up to 10 business days to reach your external bank account.

The Twine app doesn’t make up for it with a stellar interest rate. The variable APY of 0.78% is higher than you’ll find on most savings accounts (the average APY on personal savings accounts is 0.278%). While it is a higher rate than what you’ll find on savings accounts offered by large, traditional banks, this rate is leagues behind other cash management accounts. You can also find higher rates on savings accounts offered by online-only financial institutions.

Twine investment account

John Hancock administers the investment portion of your Twine account. Its affiliate, Manulife Asset Management, builds and manages its available portfolios. Apex Clearing Corp. serves as the account’s custodian, meaning it is the one that holds the money you would one day withdraw from your portfolio. Apex works behind the scenes, so your interactions will primarily be with John Hancock via Twine.

Twine’s portfolios come with three different investing options, which John Hancock’s algorithm will assign to you after assessing your time horizon and risk tolerance:

• Conservative portfolio: Contains 94% or more bond exchange-traded funds (ETFs) and about 6% stock ETFs. This may be assigned to you if you are less than 15 years from your goal, you make less than $50,000 a year, you are extremely risk-averse and/or you have no prior investing experience.
• Moderate portfolio: Asset allocation is dependent on your time horizon. If your goal date is five years or less away, bond ETFs will make up 90% or more of your portfolio, while about 10% will be stock ETFs. Those with goal dates of 15-plus years will have 55% to 70% of their portfolio in stock ETFs, with the remainder in bond ETFs.
• Aggressive portfolio: Asset allocation again is dependent on your time horizon. If your goal date is five years or less away, bond ETFs will make up 60% or more of your portfolio, while about 40% will be stock ETFs. Those will goal dates of 15-plus years will have about 90% of their portfolio in stock ETFs, with the remaining in bond ETFs. You may be assigned to this portfolio if you have an annual household income of $200,000 or more, have extensive investment experience and/or feel comfortable taking on large amounts of risk in your investments.

Regardless of portfolio, you will need a minimum of $100 to open an investment account with Twine. These accounts are explicitly not meant for retirement, so they do not come with the tax advantages of a traditional, Roth or any other sort of individual retirement account (IRA).

Prior to November 2018, Twine offered investment accounts that were truly joined. It was one account with two owners. However, Twine’s joint investment product is now a joint goal, with each party contributing from their individual investment accounts.

How does Twine work?

You can use Twine by downloading the app on your mobile device. Currently, the Twine app is only available for iOS devices. You can access it via a web browser, too, but functionality is limited. After downloading the app and verifying that you qualify, you will provide your email, create a password and set your initial savings and investing goals.

If your financial institution is already partnered with Twine, it will be available in the app’s search feature. You should be able to easily link your account, and you should only have to go through the process once. You can link accounts from financial institutions that are not already listed, but you will have to do so by manually submitting account and routing numbers for verification. Every time you set a new goal using this method, you will again have to manually enter account information for the external account you’d like to link.

Twine does allow you to automate deposits into your account, but not in the way most fintech apps do through incentivization or some type of round-up savings program. Instead, when you set a goal, you'll be able to set up a more traditional recurring transfer from your external funding account into your Twine account.

How much does Twine cost?

John Hancock defers any charged fees on its Cash Account to Apex Clearing Corp. Apex may charge fees for any service, but Twine specifically references paper statements, wire transfers and insufficient funds in your external funding account as reasons Apex might charge you fees.

While there are no minimum balance requirements on your Cash Account, you will need at least $5 to open the account.

For investing accounts, you will be charged a 0.60% annual program fee. That means you will be charged 25 cents a month for every $500 you have invested. This fee is on the higher end for a fintech investing app and does not include, among other things:

• Transfer taxes
• Fees incurred when you trade
• Fees hidden within the ETFs themselves
• Any additional fees Apex may charge

Who should use Twine?

To open an account with Twine, you must be a U.S. citizen or permanent resident 18 or older. You must also have an email address, provide a Social Security number and have an account from an outside institution that you can use to fund your Twine accounts.

There are not many who would benefit from using Twine over its competition, though those who are attempting to reach goals via investing with a partner may enjoy the app’s functionalities.

Is Twine safe to use?

Typically, when you open a Cash Account, Apex is working behind the scenes to do something called a cash sweep, where it distributes your money across several different banks. If this happens successfully, you may be able to secure FDIC insurance at each bank up to the legal limit.

If you make the extra effort to opt out of the cash sweep program, or Apex should go under before it is able to sweep your cash into a partner bank’s hands, your money will be insured by the Securities Investor Protection Corporation (SIPC) up to $250,000. The SIPC is not government-backed like the FDIC, and is therefore less secure. Your funds will only be insured if Apex closes, not if Apex manages your money in a way in which its value is depreciated thanks to market fluctuation.

For the SIPC to insure your money, you must certify that you intend to invest the money you’re holding in your Cash Account. This makes the ethics of using your Cash Account as anything akin to a checking or traditional savings account extremely uncertain. Although Twine is marketing itself as an alternative to a savings account, technically you pledge that any money held outside Apex’s sweep program is explicitly intended for future investments rather than liquid withdrawal.

Additionally, the SIPC will cover the money held in your investment account up to $500,000. That $500,000 of coverage is inclusive of the unswept-cash limit of $250,000 discussed above. It’s important to remember that the SIPC doesn’t protect against market fluctuations, but it has the singular purpose of paying out if your clearinghouse closes and takes your money with it.

Pros and cons of the Twine app

Pros

• Platform provides user interface for those working on investing goals with a partner
• Can potentially secure more FDIC insurance if you are enrolled in the cash sweep program
• No minimum balance requirements on Cash Account
• Portfolio algorithm is flexible within ranges to meet your individual investing goals and needs

Cons

• Ethical gray area of using your Cash Account as a replacement for a checking or traditional savings account
• APY is not competitive
• Product/management fee is on the higher side
• Transferring money into and out of your Twine account can be a long process
• Full features only available on iOS devices

How does Twine stack up to the competition?

Twine isn’t the only app on the market. Whether you’re looking to save more without thinking, earn a higher APY on your savings or get on the same page with your life partner, there are more competitive and practical options out there.

Acorns

With an Acorns Spend account, which is the rough equivalent of Twine’s Cash Account, you don’t earn interest. You take the change Acorns gets from rounding up all your purchases to the nearest dollar and automatically invest it in a taxable investing account. Acorns also partners with businesses who may give you a certain percentage of a purchase, which is automatically added to the investing portion of your account. This account does come with a $3 monthly fee.

Rather than charging you a management fee that is a percentage, Acorns charges you $1 a month to open a taxable investing account (note that the $3 plan includes investing). If you have a balance under $2,000, that fee can end up being more expensive than Twine’s 0.60% program fee.

Between these two tiers, Acorns offers a $2-a-month option for those who want to invest in tax-advantaged retirement accounts. You’ll get everything you would with the $1-a-month account, plus access to tax-advantaged retirement accounts such as IRAs.

Betterment

Betterment’s Everyday Savings account pays a whopping 2.04% APY, highlighting how low Twine’s 0.78% APY offering really is.

It also offers up to $1 million in FDIC insurance on this account, only charges a 0.25% management fee — compared to Twine’s 0.60% program fee — and offers tax-advantaged retirement account options. In a Twine versus Betterment head-to-head battle, Betterment wins hands down.

Honeyfi

Honeyfi is a different type of app you may be interested in if you are in a relationship and attempting to manage your joint finances. Its tools for couples are far more intensive and practical than those offered by Twine. The app allows couples to customize how much of their financial life they share with their partner and how much they keep to themselves as an individual.

One of these features is Honeyfi Goals, where you and your partner can both contribute to those goals that you share.

For its services, Honeyfi charges $59.99 a year or $9.99 a month per couple, though this fee is not truly comparable to our other apps. The intent of the app and the services it provides are less about interest rates and investment accounts and more about facilitating healthy money habits between couples.

The bottom line: There are better options

Whether you’re looking at the Twine app for its cash management account features or are interested in the way it functions for couples, there are better options. These better options come with better customer service accessibility, too. You won’t find an easily accessible live chat option with Twine, and the phone line is only open from 9 a.m. to 5 p.m. ET Monday through Friday.

Betterment and Honeyfi address each of those respective needs in a better, more holistic and potentially cheaper way. Their customer service representatives are more readily available than those at Twine, and they’re hardly the only competition on the market.