Summer Robo-Advisor News

Last Updated on August 2, 2020 by Alexandra DeLuise

Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t  believe is valuable

When our Spring edition of robo-advisor news appeared in May, the world was still reeling from COVID-19. Though we have seen some wild changes in the market, the general prognosis for robo-advisors stays positive.

In fact, many robo-advisors are hitting record levels of assets under management (AUM)! Big financial companies are also purchasing robo-advisors for millions of dollars, which can mean only one thing: robo-advisors are here to stay.


*Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link.

Robo-Advisor Acquisitions in 2020

This year, there have been some large robo-advisor purchases. Financial giant Goldman Sachs purchased Folio in order to boost its Registered Investment Advisor (RIA) custody slant.

As we noted in our Spring news, Motif’s accounts were taken over by Folio when they announced their closure earlier this year. It’s not clear yet if and how Goldman Sachs plans to change account management for former Motif clients.

Personal Capital also sold this quarter. Empower Retirement purchased Personal Capital for a whopping $825 million; they will pay an additional $175 million if the robo-advisor reaches its growth goals over the next two years.

Good news for Personal Capital clients: Empower’s plans for Personal Capital may include a slow integration over time, but for now they’re going to let the robo-advisor run independently as it is.

Banks Have Been Supplementing with Robo-Advisors

Many brick-and-mortar banks have been finding ways to improve their services with the help of robo-advisors.

Citizens Bank recently conducted research on customer needs. From this study, they built SpeciFi, a robo-advisor that now offers IRA options. This is a fairly customizable robo-advisor, designed to appeal both to customers who are both already comfortable investing and those who have not begun to invest yet.

How’s Your 401(k)?

If the Coronavirus pandemic has taught us anything, it’s that our investments can become highly volatile at a moment’s notice.

Some robo-advisors, such as Blooom, have been working on fine-tuning their algorithms to become more recession-proof. One of the ways Blooom helps investors recession-proof their portfolios is by focusing on low-fee funds. By saving money on fees, investors can better stretch their dollars.

Robo-Advisors Continue to Grow

Despite the market fluctuations of the last few months, robo-advisors aren’t going anywhere anytime soon.

Individual robo-advisors are fairing quite well. M1 Finance’s assets alone are valued at $1 billion as of February – great news for this free, low-minimum-investment robo-advisor.

As a result of growing robo-advisors, the overall industry looks strong. The robo-advisor market in general is projected to grow to almost $1 trillion this year. By 2024, expects anticipate the robo-advisor industry will reach $2.4 trillion.

Latest Robo-Advisor News – Summer 2020

“Goldman Sachs Buys Folio to Gain an RIA-Custody Toehold, and Gets Robo-Advisors in the Bargain, Days after Schwab Buys Motif” by Oisin Breen at RIABiz.

“Goldman Sachs took another big step into the RIA business with the acquisition of custodian Folio Institutional.

The New York giant revealed its acquisition of Folio Financial Inc. today (May 14), with an expected close in the third quarter this year — and the latest overt move by Goldman CEO David Solomon to make his company much more like Fidelity Investments or Charles Schwab & Co….”

“Fintech Personal Capital Sells to Canadian Insurer for $825 Million Plus Contingency Bonus” by Jeff Kauflin at Forbes.

“Personal Capital, the San Francisco fintech that lets people invest in automated portfolios of stocks and bonds, is being bought by Empower Retirement for $825 million upfront, plus $175 million if growth goals are reached over two years. Personal Capital was last valued at $950 million in a February 2019 fundraise, according to Pitchbook…..”

“Banks Continue to Embrace Robo Advisers (Even if Customers Don’t)” by Miriam Cross at American Banker.

“About a year ago, the digital investment products team at Citizens Bank noticed that several fintech providers of robo advice had introduced high-yield cash accounts.

Citizens’ takeaway: Most of these were companion accounts, with little or no integration between the cash and investment sides. The Providence, R.I., bank decided that instead of introducing a product where rate hoppers would go for the best return, it would build a digital adviser that tied together both cash and investing, in a bid to reach customers who were banking but not yet investing with them…..”

“The Only Robo-Advisor That Can Revive Your 401(k) During the Market Crisis” by Newsweek.

“Why should you be worried? 401(k) is the foundation of your retirement security. It is the largest and most important retirement asset for the majority of US workers. It comes with major tax benefits and can be withdrawn as early as 59 ½ years of age without any penalties. For other retirement vehicles like Social Security, the age for getting maximum benefits stands at 70. 401(k) is the ideal and effortless way to build your egg nest since the contributions are auto-deducted from your paycheck.

With over 42 million job losses in the past couple of months, millions of soon-to-be retirees are torn between the decision of breaking their egg nest and finding a job in these uncertain conditions. In these pressing times, it is crucial to work on a financial plan and not be swayed by emotional triggers.

You won’t come across many robo-advisors that cater to retirement accounts. We conducted some research and came across Blooom, the only fintech company that manages and protects your retirement accounts from events like recession and ensure consistent growth. Being a fiduciary firm founded by financial advisors, they are legally bound to act in your best interest……”

“M1 Finance, a Smart Money Management Solution Provider, Surpasses $1 Billion in Assets” by Omar Faridi at Crowdfund Insider.

“M1 Finance, an established ‘smart’ money management solution provider, revealed on February 26 that it has apparently exceeded $1 billion in total assets on its platform.

According to a press release, M1 achieved this milestone in less time from its official launch and with less VC funding than other competing financial technology developers, such as Acorns,  Betterment, Stash, and Wealthfront.

Brian Barnes, CEO and founder at M1 Finance, stated:

‘M1 Finance is built for the ‘engaged investor,’ someone who wants to manage their money and enjoys the convenience of an intelligent, automated, and low cost platform.’

Barnes also noted that reaching $1 billion in assets on platform so fast validates the company’s vision and is ‘a testament’ to its team’s focus on developing a free smart money-management solution…..”

“Robo Advisors Industry Expected to Reach Nearly $1 Trillion Valuation this Year: Report” by Omar Faridi at Crowdfund Insider.

“As previously reported, passive investing strategies, like those offered by Wealthfront and other Robo-advisors, have taken a major hit. Advisors are now turning to more active fund management strategies.

However, BuyShares data shows that the global robo-advisors industry is projected to reach a valuation of nearly $1 trillion this year. The company’s data indicates that the upward trend should continue in the coming years, with the market value reaching an estimated $2.4 trillion by 2024…..”

Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t  believe is valuable

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Alexandra DeLuise

Alexandra is a banker-turned-English-teacher from the New England area of the United States. When she isn’t working with college writers, Alexandra can be found reading and writing about investing, personal finance, and the ever-growing student debt crisis. She combines her banking experiences with a love of the written word to share accessible financial tips with real people.