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Robo-Advisor News 2022 – Change Is The Constant

Last Updated on October 11, 2022 by Barbara A. Friedberg, MBA, MS

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

It has been a busy time in the robo-advising sphere. Robo advisor news updates reveal a few noteworthy changes, including big revamp announced at Fidelity Go and updates at Wells Fargo Intuitive Investor.

Two robo-advisors in particular have added value tilts to their offerings, while some experts wonder whether these new additions will pay off in the long run.

Overall, robo-advisor news, updates and changes continue and automated investing remains a popular and solid investment strategy for many investors. All of the changes remind us that robo advisors are both well established and evolving to better meet consumers needs.

Research at Vanguard discovered that investors who use robo-advisors intend to stick with them. While the same research found that investors who are used to human advisors are reluctant to switch, this research is overwhelmingly positive for robo-advisors.

These findings demonstrate that robo-advisor clients, regardless of age or wealth, are positive about their experiences and plan to remain robo investors.

However, a recent article by Christy Bieber from The Motley Fool, published by Nasdaq, showed that not everyone appreciates robo-advisors. Bieber suggests it might be worthwhile to invest with a robo-advisor “if you do not want to put any effort into managing your portfolio at all and are willing to give up some of your potential returns in order to avoid spending even a few minutes managing your portfolio.”

Ultimately, Bieber felt that robo-advisors were charging her to do a job she could quite easily complete herself.

That’s why investment management is so individual, and there’s no simple answer for all investors.

Are Value Stocks a Good Sign?

Recent robo news shares that some robo-advisors – namely Betterment and Schwab’s robo-advisor arm – are integrating value tilts into their portfolios. It’s unclear at this time whether this is a good move or not; although long-term performance is fairly strong for value stocks, they’ve suffered lagging performance for the past decade.

History favors value investing, but there are long periods of time where the value sector underperformed growth stock investing.

Changes for Wells Fargo: Lowered Minimums and Additional Investments

Wells Fargo has made a few changes to its robo-advisor as well. Clients can now begin with a $500 minimum investment, which is more affordable than their original $5,000 minimum requirement.

Additionally, Wells Fargo is adding to their list of investment options to align more with millennials’ preference for socially-responsible and sustainable investments.

SEC Maintains Pressure on Robo-Advisors

As we mentioned recently in SEC vs Robo Advisors news, the SEC, whose mission it is to protect investors, has been keeping a close eye on robo-advisors. This pressure remained throughout the summer, as SEC strives to ensure investor’s best interests are placed ahead of the interests of an investment firm or robo-advisor. The SEC continues to promote transparency within the automated investing arena, a welcome activity.

Latest Robo-Advisor News – 2022

“Revenge of the Value-Tilted Robo-Advisors,” by Amy C. Arnott at Morningstar Investor.

“Two of the largest robo-advisor programs—Betterment and Schwab Intelligent Portfolios—have embedded significant value tilts in their portfolios. They had good reason for doing so, as many academic studies previously found a long-term performance edge for value stocks (typically defined as those that are trading at relatively cheap prices based on metrics such as earnings, book value, sales, or liquidation value).

Recent history, however, has proved more difficult. Value stocks have only recently pulled ahead of their growthier counterparts after lagging far behind over most of the past 12 years. This resurgence gives value advocates a much-needed taste of redemption. But value’s decade-plus stint of wandering through the wilderness raises questions about whether robo-advisors should really be tilting their portfolios toward any investment style, be it value or growth.”

Fidelity Plan to Combine Robos Makes a Lot of Sense, Tech Experts Say” by Jeff Berman at Think Advisor

  • “Fidelity confirmed [that] it plans to merge its automated Fidelity Go and hybrid Personalized Planning & Advice businesses, effective Nov. 1. The firm will offer Fidelity Go with no advisory fee for accounts under $25,000. Accounts over $25,000 will be charged 35 basis points annually.

After Fidelity Investments on Monday confirmed it will merge its automated Fidelity Go and hybrid Personalized Planning & Advice robo-advisor businesses in a move that will become effective Nov. 1, tech experts weighed in, calling it a sensible move.

“We are always evolving our offerings to meet customer needs,” a Fidelity spokesperson told ThinkAdvisor on Monday.

“With this change, we will extend the benefits of Fidelity Go for younger and emerging investors through no advisory fee for accounts under $25K, and provide the coaching and planning of Personalized Planning & Advice at a new lower price for investors with accounts over $25K,” the spokesperson added.

Accounts over $25,000 will be charged 35 basis points annually, the spokesperson confirmed.”

“Robo Advisors and Brokerage Apps Under SEC Scrutiny Again,” by Diana Li at Financial Planning.

“SEC Chair Gary Gensler is once again speaking out about robo advisors and fintech brokerages, expressing concerns about the potential conflict of interest in those algorithm-driven platforms.

Speaking at the North Americans Securities Administrators Association symposium on Tuesday, Gensler said digital engagement practices such as robo advisors and brokerage apps should be closely examined to see if those platforms are optimizing investor benefit rather than boosting their own revenues and performances.”

“Wells Fargo Drops Robo Minimum with Relaunch,” by Alex Padalka at Financial Advisor IQ.

“Wells Fargo says it has dropped the minimum on its robo-advisor platform in what the company calls a ‘relaunch.’

The firm’s Intuitive Investor automated investment platform now has a $500 minimum, down from $5,000, according to Wells Fargo.

The relaunch also features an updated menu of investments, with the robo now offering portfolios “influenced” by environmental, social and governance factors, Wells Fargo says, citing a study that 82% of millennials expressed interest in having some of their money in sustainable investments, as did about half of baby boomers and Generation X.”

“Robo or Human Advice? Investors Want Both in One Place,” by Paulo Costa at Vanguard.

“As digital “robo-advice” offerings have expanded in scope and availability, questions have arisen about the future of traditional advice given by humans. Will digital advice take over?

Our research finds that human-advised clients are, in fact, not likely to switch to digital advisors. Quite the opposite, 9 in 10 robo-advised clients are considering switching to a human advisor in the future.

At the same time, clients believe that there is some room for automation of services in a practice.

For human advisors, then, perhaps the most useful strategy is to figure out how to incorporate both modes of advice into their practice.”

“Why I’m No Longer Investing with Robo-Advisors,” by Christy Bieber at Nasdaq.

“Robo-advisors are services that invest your money for you based on an algorithm. For a small fee, you can provide insight into your risk tolerance and the robo-advisory service will put your money into a mix of different funds appropriate for your goals and investing timelines.

I do not enjoy spending time researching potential investments, so several years ago I decided to try out a robo-advisor. I opened an account and put a substantial amount of money into it. But, even though my investments did OK, I ultimately decided this method of buying assets wasn’t for me. I pulled my money out and haven’t invested with robo-advisors for years.”

Robo Advisor News Wrap Up

Some of the most popular robo advisory models today are the hybrid, robo plus human advisor combination. Betterment, Personal Capital, Vanguard, SoFi and many more offer users access to varying degrees of financial advice. While muddling through the murky investment waters of 2022, more new investors realize that financial markets decline, as well as trend upwards. And these investors realize the importance of having someone with whom to chat about investing. The frequent changes in the automated investing world benefit investors with greater choices. But increased choice can lead to greater difficulty with decision-making. Take our quiz to help you pick the best robo-advisor, for you.

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

Empower compensates Stocktrades Ltd (“Company”) for new leads. Stocktrades Ltd is not an investment client of Empower.

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Barbara A. Friedberg, MBA, MS

Barbara Friedberg, MBA, MS brings decades of finance and investing experience to Robo-advisor Pros. She is a former investment portfolio manager and taught Finance and Investments at several universities. Barbara Friedberg's published work includes Personal Finance; An Encyclopedia of Modern Money Management (Greenwood Press), Invest and Beat the Pros-Create and Manage a Successful Investment Portfolio and How to Get Rich; Without Winning the Lottery. Follow her on twitter