Robo-Advisor News 2021: Surprises at Betterment

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There is no stopping the growth of the robo advisor market. With interest rates in the toilet – the stock market is seen as the only place to invest and strive for decent returns on your money! The latest robo advisor news, and asset growth inderscores the promise of this industry.

Launched in the wake of the 2008 financial crisis with Betterment and Personal Capital the robo-advisor ball is rolling down the mountain and growing with each passing year. We started Robo-Advisor Pros in 2016, and barely a month goes by without an email from a new start up promoting their platform.

The major banks and brokerages are launching robos to compete with the stand alone shops. While many firms have closed – Qplum, Hedgeable, Emperor Invests, and Swell – to name a few, others are sprouting up to replace them.

*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.

2021 brings a host of Robo-Advisor News and optimism surrounding the industry.

Here is a taste of the latest Robo-Advisor News with links to the complete stories. Enjoy the stories, and if you have any robo-advisory questions, feel free to write in. To read the full stories, just click on the story title, and you’ll be directed to the complete post.

Wealthfront’s unlikely tapping of Sheila Bair and Tom Curry signals likely push to gain a bank charter, analysts say, in RIABiz by, Oisin Breen

Wealthfront had a few false starts before coming the robo-advisor brand we know today.

“First, it was founded in 2008 as KaChing with RIAs built in. Then, a few years later, it relaunched as Wealthfront to do what we know as robo-advising to tread water for a decade. Finally, the founders realized they’d been overthinking the model all along and threw in with pop-up web banks in February of 2019. They got as many bank assets in a few months as they had gathered in the previous few years in wealth management.”

The current Wealthfront Cash Account interest rate is 4.55%. The rate will vary based upon market interest rates.

“In what industry insiders see as the clearest sign yet that Wealthfront is hell bent on obtaining a bank charter, the robo-advisor has added two former top government banking regulators to its banking advisory group. Former Federal Deposit Insurance Corp. (FDIC) Chair Sheila Bair and former office of the Comptroller of the Currency (OCC) head Tom Curry will lend their expertise to help navigate regulatory red tape.

‘I suspect it’s to get a bank charter,’ says former banking consultant Jonathan Holtoway, via email.”

The cost of client acquisition is so high, and most robo’s are populated with many less-profitable small investors, that firms are seeking ways to broaden their profits……

Franklin Templeton, Apex Clearing and Bambu launch Tango robo adviser, in Wealth Advisor.

Further reinforcing the power of digital investment management, these three power houses join together to laund the Tango Robo Adviser. But before you individual investors go searching for the platform, understand that this one is a “white-label” product sold only to financial advisors. The advisors then use the tool with their clients. The concept works to allow advisors to spend more one-on-one time with their clients and less on the actual investment portfolio construction.

“The all-in-one solution is a collaboration between three industry leaders—Franklin Templeton, Bambu, and Apex Clearing. Franklin Templeton provides the personalised, goals-based portfolio management advice to advisors through its proprietary Goals Optimisation Engine (GOE). Bambu’s white-label platform is the digital solution for clients and advisors, while Apex facilitates trading and custody through its modern back-end platform built for safety, scale and speed.

‘Tango is a single solution built on the expertise of three partners, each providing a unique offering for advisors, and it is truly a case of the whole being greater than the sum of its parts,” says Harshendu Bindal, director of Digital Strategy and Wealth Management for Franklin Templeton. “As the industry continues to move towards digital platforms and technology-based services, investors increasingly expect a seamless digital experience. Tango will give advisors the ability to focus on growing their client relationships with professional management, personalised to their client’s specific goals, without the demands of increased back-office responsibilities or up front charges that are typical of many robo platforms.’ ” …..

Betterment’s Jon Stein Steps Down as CEO, in Investment News by, Nicole Casperson

Betterment is one of our favorite robo-advisors and considered a founder of the robo investing concept.

“Betterment founder and CEO Jon Stein is stepping down as the company’s chief executive officer, the automated advice platform announced Tuesday.

He will be replaced by Sarah Kirshbaum Levy, former Viacom Media Networks’ chief operating officer, and remain with the company to serve as chairman of the board. The reason for the departure was a personal decision by Stein.

Levy has been an operating adviser at Betterment for the last several months, according to the announcement. Stein will remain on through the end of the month to ensure a smooth executive transition. 

‘I’m extremely proud of the work we’ve done at Betterment over the past ten years,” Stein said. “It’s been an honor and a humbling experience to lead a company that has made such a significant impact on both the financial industry and consumers’ everyday lives. But when I look at what is next for Betterment, the time has come for someone else to lead the company through its next stage of growth.’

Stein launched Betterment in 2010 on the heels of the Great Recession, providing automated portfolio management services to the mass affluent when that service was typically reserved for the ultra wealthy. Stein has been credited with creating the “robo-adviser” space, according to the announcement.”….

If you’re interested in learning more about this comprehensive platform, take a look around. There is a lot to love about this premier robo-advisor with financial advisor for all.

Top ETFs from the 5 Best Robo-Advisors – Should You Invest? in InvestorPlace by Barbara Friedberg

I wrote this article, in part to satisfy my own curiosity. I performed an analysis of the recommended ETFs used by several of the most popular robo-advisors. My thinking was that these platforms hire brilliant investment advisors to craft their portfolios using the best investing practices. Out of the thousands of available ETFs, I wondered whether there would be overlap between the platforms, and if so, how much.

The results surprised me!

“The diversification for each robo-advisor includes a wide range of asset classes. All of the robo-advisors include a broad based U.S. stock and U.S. corporate bond fund. Additionally, each provider includes at least one international stock fund. That is where the similarities end.

On the low end, the Vanguard Digital robo includes only four ETFs that represent U.S. and international stock funds and U.S. and International bond funds.

While Schwab Intelligent Advisors portfolios include 19 ETFs representing various corners of the investment markets. In the Schwab equity, or stock choices, there are several ‘fundamental’ as well as ‘market capitalization weighted’ funds.

The market capitalization of each stock is calculated by multiplying the share price by number of shares outstanding. The companies with the greatest market capitalization are weighted more highly than those with small market caps. While fundamental indexes use factors such as sales, cash flow, dividends and buy backs to weight the stocks. This gives a greater advantage to value stocks, within the index…..”

To get the complete picture, click on the story title. But, I’ll give you a hint, Vanguard ETFs were well represented!

Top Robo-Advisors

Robo AdvisorManagement FeeInvestment Minimum
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0.25% of AUM ($5,000 managed for free)$500Sign up
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Betterment logo0.25% of AUM for accounts worth more than $20,000 | $4.00 for accounts worth less than $20,000None - $10 to begin investingSign up

Robos Slightly Outperformed Human Advisors in Client Satisfaction During Crisis in ThinkAdvisor by Michael S. Fischer

Fortunately for consumers, you don’t need to choose between hiring a robo-advisor or a human financial advisor. There is a long list of hybrid robo-advisors from which to choose.

“Robo-advisors seem to have passed their first big test with flying colors.

Dalbar, an investment research firm, reported recently that 82% of investors it surveyed were satisfied with their robo-advisor during the market crisis brought on by the pandemic earlier this year. This compared with 71% of investors using an advisor.

The survey, conducted in August, included nearly 500 investors in North America working with a robo-advisor and 500 investors working with a human financial advisor.

The study found that although human advisors were more diligent in communicating with clients than robo-advisors during the market crisis, less communication by robo-advisors failed to diminish the trust and confidence of their investors. 

Indeed, 55% of investors with robo-advisors said their confidence had “significantly” increased based on their experiences during the crisis, compared with 28% of investors working with traditional advisors. Plus, 47% of robo clients said their trust had significantly increased in this period vs. 29% for the clients of  human advisors.

Investors in the study indicated that they were inclined to retain their advisor following their investment experience during the COVID-19 crisis. Again, those with robo-advisors were more likely than traditional advisors to do so: 92% vs. 82%…..”

Ursa selects DriveWealth to provide infrastructure for research-driven personalized stock portfolios in DriveWealth by Elise Ransom

Ursa is one of the newest robo-advisor platforms, seeking to make it’s mark on the industry. Taking an active management approach, the app is shunning the typical passive investment approach favored by most platforms.

“Using DriveWealth’s API-based brokerage platform, Ursa was able to build from concept to launch in less than three months. DriveWealth’s infrastructure allows Ursa to focus on building out a unique investment offering for its users.

At the heart of this unique offering from Ursa is the curated content it provides for users to build a personalized stock portfolio. Ursa will research S&P 500 companies and share digestible insights and recommendations with users, who can then customize portfolios based on their personal preferences. Ursa will then continue to provide portfolio guidance to ensure users are making informed decisions about their funds.

“Ursa’s unique offering aligns well with DriveWealth’s overall mission to make investing accessible to retail investors around the world,” said Bob Cortright, founder and CEO of DriveWealth. “Ursa is giving consumers the ability to invest in some of their favorite companies in a way that provides a path towards building long-term wealth.”

Ursa will recommend companies to users based on a number of different factors including, but not limited to, significant growth opportunities, defendable competitive advantages, strong balance sheets, high return-on-capital, strong leadership teams, and attractive risk/return profile. Users have the ability to choose from a stock list consisting of 50 companies across different sectors……”

The closest competitor we assess is the popular Titan Invest robo-advisor. This platform follows a hedge-fund inspired stock investing strategy. Click the button to check out the platform.

If you are considering using a robo-advisor, take the Robo-Advisor Quiz and you’ll be directed to a platform that meets your needs!

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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

I have a Schwab Intelligent Portfolios account.

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