Robo-Advisor News

Robo-Advisor News July 2018 – U.S. Bancorp, WorthFM + More

Who Needs a Niche Robo-Advisor?

Do we really need niche robo-advisors? In light of the customizability of most robo-advisors, being upset about the closing of WorthFM, a robo-advisor specifically designed for women, could seem hyperbolic.

Still, niche robo-advisors are helpful for many different situations.

Women might need certain features in a retirement planner, for example. Other investors might want a robo-advisor specially equipped to handle Bitcoin or other cryptocurrency investments. And while some new investors might want to get started with a low-cost robo-advisor, other robos are starting to try attracting wealthier, established investors.

While more traditional robo-advisors might do the trick just fine, women might feel more comfortable using a robo-advisor specifically designed with their needs in mind. After all, women have unique life situations.

A robo-advisor that specializes in women’s investing is useful for a number of reasons:

• Women who take time off for maternity leave may find that they are taking unpaid time off, thus halting some of their retirement savings.
• Some women have gaps in employment caused by child rearing. These gaps lower their overall earning potential.
• The pay gap is still very real, causing many women to be paid less than their male counterparts, if not wildly underpaid in some sectors.

Actually, we do need niche robo-advisors, because investors have specific needs.

Despite the closing of WorthFM – Blooom (for 401ks), Emperor Investments (for stock investing), IncomeClub (for bond investing) and qplum (for active investing) all fill needs for distinct individuals. And, without niche robo-advisors this fintech field would be at risk of becoming just another arena of commodity investment products.

More Robo-Advisor News

From new trends and high-performing newbies to closed niche robo-advisors and robos changing focus, this month’s robo-advisor news is loaded with changes you need to read about.

“A Much Heralded Robo for Women Quietly Closed” by Davis Janowski, WealthManagement.com

“WorthFM was one of a string of similar online investment platforms for women launched around the same time. Each sought to bring together a dose of high-gloss branding, with a focus on empowering female investors, to create a differentiated service from the increasingly crowded field of robos: Financial advisor Tina Powell launched robo advisor SheCapital in 2015 and Sallie Krawcheck, the former CEO of Merrill Lynch Wealth Management, used her high-profile status to launch Ellevest in 2016—the same month that WorthFM debuted in beta. Of those, only Ellevest remains.”…..

“Robo-Advisor Startups Are Now Going After Wealthy Clientele” by Julie Verhage, Bloomberg.com

“Robo-advisers were built on the promise of offering wealth management expertise to the masses. Now those startups are turning their attention to a different — and much wealthier — customer.

Betterment LLC, the largest startup in the automated financial advisory market, said Wednesday that it’s adding a tool for some clients to adjust investment allocations in more granular ways. The service is limited to those with at least $100,000 under management by Betterment.

The product follows similar moves by two other robo-adviser startups in recent months. Ellevest, a women-focused investment platform founded by Wall Street veteran Sallie Krawcheck, introduced a private wealth management service late last year for clients willing to put in more than $1 million. Last month, Wealthfront Inc. added a tool to minimize investment risk for customers with $100,000 or more.”…..

“2 New Robo-Advisors Among the Top Performers in Q1” by Bernice Napach, ThinkAdvisor.com

“Two relative newcomers to the robo-advisor space are among the industry’s top three performers in the first quarter, according to the latest Robo Report from BackEnd Benchmarking.

SoFi Wealth Management, which launched in May 2017 as an offshoot from the SoFi online lending platform, took first place; TIAA SRI, the socially responsible investment portfolio of its TIAA Personal Portfolio robo, placed third; and sandwiched between the two was Schwab Intelligent Portfolios.”…..

“When a Robo-Advisor is, or isn’t, the Right Choice” by Eric Jansen, CNBC.com

“Investment management and financial planning are both important, but they’re not the same thing. Financial planning provides you with an actual human advisor who can educate and guide you to where you want to be with your money. This is an ongoing process that includes personalized attention and, importantly, accountability.

It’s a long road to financial success, and having someone keep you on track can make all the difference. Services such as investment management from a robo-advisor provide you with options and solutions but little context.”…..

“6 of the Newest Trends in Robo Advisors” by Barbara Friedberg, USNews.com

“Fintech robo advisors are blanketing the financial landscape – the robo advisory market is expected to reach between $2.2 trillion to $3.7 trillion in assets under management by 2020 and $16 trillion by 2025.

Yet, robo advisors aren’t a uniform investment management solution and vary among companies.

The drivers for this financial explosion are investment strategies based on Harry Markowitz’s Nobel prize-winning modern portfolio theory and investment management priced at a fraction of typical financial advisory fees. Legacy investment management fees of 1.5 percent have dropped to zero with many robo advisor platforms.”…..

“U.S. Bancorp Taking on Robo-Advisors with BlackRock Unit” by Donna Fuscaldo, Investopedia.com

“U.S. Bancorp (USB) is entering the digital investment advisory market, going after older investors with the new service. Citing Mark Jordahl, president of U.S. Bank Wealth Management, American Banker reported that U.S. Bancorp has tapped FutureAdvisor, an investment advisory firm backed by BlackRock, Inc. (BLK), to develop the robo-advisory platform. A partnership between U.S. Bancorp and BlackRock was forged in 2016, and since then, the two had been perfecting and testing the service before the full launch this week. While most people think of millennial investors when discussing robo-advisors, U.S. Bancorp is going after older investors as well.”….

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Barbara A. Friedberg, MBA, MS

Barbara A. Friedberg, MBA, MS

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