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  • Robo-Advisor News – Fall 2019 – Vanguard, Axios Invest and More

Robo-Advisor News – Fall 2019 – Vanguard, Axios Invest and More

Last Updated on October 15, 2019 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

The robo-advisory landscape is changing at lightspeed.

With Vanguard broadening it’s options to the growth of the industry, it’s tough to keep up.

To be perfectly candid, trying to keep up with the changes in robo-advisory landscape is a full time job. Although we’re typically focused on U.S. robo-advisors, we need to cover  the premier UK robo-advisor, Nutmeg’s troubles. Are they following the trend of former robo advisors Hedgeable and Swell’s demise?

This season we’ll touch on Wisebanyan’s new home, the addition of Vanguard’s new service and more. Read these clips from important fall robo-advisory trends. Click the article titles to read the complete stories.

Top Robo-Advisor News

“The UK’s Largest Robo-advisor is Struggling to Rein in Losses” by Mekebem Tesfaye at Business Insider

“Amid heavy spending on staff, technology, and marketing in a bid to attract new customers, Nutmeg, the UK’s largest robo platform, has revealed a 50% surge in losses in 2018, reports the Financial Times. During the period, it lost £18.6 million ($22.9 million), compared with £12.4 million ($15.3 million) in 2017. Despite the mounting losses, Nutmeg, which has previously been reticent to outline when it expects to break even, aims to be operationally profitable within three years, CEO Martin Stead told the FT.

Nutmeg’s latest figures are evidence of the growing concerns about the viability of robo-advisory fintechs’ business models. The figures reveal a worrying trend: low revenue generation and high customer acquisition costs…….”

“Refinitiv is in the Robo Game. Now What?” by Paola Peralta at Financial-Planning

“Refinitiv is breaking into digital advice with the help of SigFig.

The market data provider will leverage SigFig’s robo advisor technology for institutional clients on their custody and clearing platform Beta. The offering includes account opening, automated investment management, money movement and a client portal, according to the firm.

The partnership between Beta and the SigFig makes “eminent sense,” according to The Rudin Group CEO, April Rudin.

“The data that Refinitiv holds can be used for SigFig clients to better understand their wants and needs,” she says in an email. “For Refinitiv, it gives them another revenue stream for their existing clients. This is a valuable distribution channel.”

Refinitiv has deep client relationships with enterprise firms globally. The market data giant is best known as a leading provider of financial data and infrastructure, serving over 40,000 institutions in over 190 countries…..”

“Vanguard Digital-only Tool Could Pinch Wealthfront, Betterment” by Ryan W. Neal at InvestmentNews

“Vanguard isn’t talking yet about the new all-digital financial planning and automated investing product it is currently testing, but a brochure filed with regulators this week hit the already crowded and competitive digital advice marketplace like a bomb.

The firm’s Personal Advisor Services already dominates the hybrid robo-advice space with about $140 billion in assets under management, though the majority were brought over from existing Vanguard accounts. The new robo-adviser, currently called Vanguard Digital Advisor, promises to bring a more affordable, purely digital alternative down market to a greater number of investors.

Try out our Robo-Advisor Selection Wizard for help choosing a robo-advisor.

While PAS requires a $50,000 minimum investment and charges a 0.30% annual management fee, investors can open a Digital Advisor account with just $3,000 and pay a 0.15% management fee……”

What the Pure Robo-Advisors Got Wrong, and What Comes Next” by Jeff Berman at ThinkAdvisor

“One of their biggest mistakes: putting too much focus on millennials, according to a FinovateFall panel.

A balanced, hybrid approach to advising that includes robo-advisory services combined with human advisors stands to have the most success in the future, according to executives from Envestnet, New York-based financial advisor Pefin and New York wealth management strategy firm The Rudin Group.

Asked during a panel session at the FinovateFall conference in New York Wednesday if the industry should just make hybrid offerings available to consumers and let them choose what they want, Phil Nicolaou, senior vice president and regional director at wealth management technology company Envestnet, said that was ‘conceivable to do’.

Pure robo-advisors tried to shake up the industry, but most of them weren’t all that successful, according to John Crittenden, chief strategy officer and director of partnerships at Pefin, a company that bills itself as “the world’s first AI financial advisor…….”

robo advisor news - woman money

How Much will Robo-advisors Manage by 2020?” by Brendan Byrne in ValueWalk

“Robo-advisors are digital platforms that use algorithm-based financial planning to collect information, establish the risk profile, and recommend suitable financial instruments to clients. In the past decade, robo-advisors have evolved and now they can handle complex tasks such as retirement planning, budget planning, tax-loss harvesting, and investment selection. These machine learning algorithms can analyze huge amounts of data and ultimately reduce the cost of service.

One robot is, of course, able to perform a job that previously required the effort of thousands of people. It is clear why robo-advisors are gaining traction on the market. But how much exactly will they have in assets under management over the next few years?  For example, Wealthsimple, the leading robo advisor in Canada, currently manages $4 billion in assets for over 120,000 clients from all over the world……”

“One in Five Millennials are Comfortable with a Robot Managing Their Money” by PR Newswire at Yahoo!finance

“Significant demographic shifts are poised to reshape the economy in a multitude of ways, particularly for financial advisors. Global X ETFs, the New York-based provider of exchange-traded funds, released the results of its fourth annual survey of high net worth investors, “Beyond Baby Boomers,” which exposes key differences in financial tendencies between generations. The survey focused included Millennials (ages 21-39), Gen X (40-54), Baby Boomers (55-73), and Swing (74+).

As the number of robo-advisors offered by asset managers and advisors continues to balloon, 19% of Millennials surveyed expressed comfort with a robot managing their investments or money. Compared with 11% of Gen X respondents and 3% of Baby Boomer and Swing respondents, this makes Millennials the generation most comfortable with these tools, yet the comfort still remains with a minority. Further, Millennials tended to be the generation that was most likely to increase their usage of a financial advisor in the event of a major life event……”

Bonus: Disadvantages of Robo-Advisors and Robo Financial Advisors

Why a Robo-Advisor Wasn’t Enough for Bok Financial” by Sean Allocca at Financial Planning

“When Bok Financial wanted to add digital advice to its offerings, it decided it had to do more than just launch a robo advisor.

The $42 billion-asset financial services firm created an entirely new advisor unit that can provide person-to-person investment counseling to customers who start with digital advice and need extra help, said Benjamin Munos, Bok’s digital product manager.

Bonus: Read the latest Robo-Advisor News

“Google and Apple have dictated the user experience,” Munos said. “Our customers are becoming more aware, and increasingly more intelligent about the experience, so knew we had to evolve our digital wealth offering.”

In a recent webinar hosted by American Banker, Munos and other guests acknowledged the crossover of fintechs and wealth management firms into banking is having an impact on lenders…….”

Axos Financial rebrands its WiseBanyan subsidiary as Axos Invest” at BusinessWire

“Axos Financial, Inc. (NYSE: AX) (“Axos” or the “Company”) announced that WiseBanyan, the digital wealth management platform it acquired earlier this year, has been rebranded as Axos Invest.

With the rebrand, Axos Invest will begin to merge its offerings with Axos Bank’s checking, savings, and lending services to enable consumers to better manage their finances while streamlining their overall customer experience.

“By integrating Axos Invest into our universal digital banking platform in the near future, we are taking another step toward creating a seamless customer experience and a holistic personal financial management ecosystem,” said Axos Financial CEO Greg Garrabrants. “Over time, we see tremendous opportunities to expand the breadth of services to retail and high net worth investors, registered investment advisors and strategic partners……”

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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