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Robo-advisor News November 2018 – TD Ameritrade, Wealthfront + More

Human-robo Hybrid Advisors are the Order of the Month!

By staff columnist, Alexandra Deluise

Companies like Morgan Stanley and Wealthfront, are digitizing aspects of their financial advice so that clients can get the quick algorithmic thinking of a robo-advisor, while also benefiting from the human touch that is frequently missing from robo-advisors.

Times are changing, and investors want (and need!) flexibility in their investing options. In response to these needs, investment companies are combining the best of robo-advisors with human counterparts.

How Do Investment Companies Feel About Human-Robo Hybrids?

Some robo-advisors are reducing or eliminating the need for human advisors by upping the game. Wealthfront’s Path system is designed to help most 30-45 year olds with financial support without relying on a human financial planner. Barbara Friedberg writes at Investor Place that this new Path can replace human financial planners entirely for a specific set of investors, though she notes that this system may not be ideal for investors with large investment portfolios.

Still, the field is a long way from completely digitizing the investing process. According to Sean Allocca at Financial Planning, Personal Capital is adding offices in large cities in the US in order to bolster its human support systems. These human advisors can meet with clients in person or online, with the latter being the most requested.

Even Morgan Stanley, which employs human financial planners, uses robo-advisor algorithms to figure out what customers might need. These recommendations come to the investors in emails, writes Lorie Konish at CNBC, and can sometimes appear to be coming from the human financial planner. These algorithms combine machine learning with the human financial planner’s knowledge of the client to provide even more personalized service.

What Else Is New in the Fintech Robo-advisor World?

Betterment and RightCapital have announced a partnership to help their technologies work together and complement each other, writes Samuel Steinberger at WealthManagement. The two companies are combining tools such as RightCapital’s student loan repayment tool and other technologies geared toward helping investors approach retirement.

Exciting news for investors who want to make a difference: TD Ameritrade is offering Socially Aware profiles! According to WealthManagement, these five profiles will be geared toward various goals and keep investors’ risk tolerances in mind.

More Robo-Advisor News, November 2018

“Firms, Like Morgan Stanley, Are Using Artificial Intelligence to Manage Clients’ Money” by Lorie Konish at CNBC

“Artificial intelligence refers to the ability for computer science to be applied in ways that replace human intelligence. Financial firms — ranging from big Wall Street names like Morgan Stanley to robo-advisors and start-ups — are all taking a look at how tools such as algorithms, data mining and natural-language processing can help you become wealthier.

Morgan Stanley formally launched its initiative — called Next Best Action — to its more than 15,000 financial advisors earlier this year. Including the firm’s service employees, more than 20,000 have access to the tools.”

“Advisor Recruiting Intensifies Among Hybrid Robos” by Sean Allocca at Financial Planning

“New technologies will increasingly streamline wealth management and push clients toward automation, according to a 2018 report by Capgemini. Automated advisory services, like artificial intelligence apps, could increase efficiency by 45% to 55% and directly add upwards of $800 billion in economic impact in the next decade. The goal will eventually be to find top talent comfortable with dispensing advice digitally, says Vijay Raghavan, senior analyst at Forrester.

‘As millennial investors themselves get older and their financial lives become more complex, like their parents, they are looking for advice from human advisors,’ Raghavan says. ‘In the long run, the robo advisor and wealth management firms who will be successful will be the ones that offer a timely, seamless handoff, from digital to a person-to-person interaction, via phone or live chat, and provide the right level of affirmation and reassurance that customers need[. . .]’”

robo-advisor fintech news - september 2018

“Can a Digital Financial Advisor Completely Replace a Human?” by Barbara Friedberg at Investor Place

“Wealthfront believes that the current financial advisory model is obsolete and wants to circumvent in-person meetings, video chats and phone calls by offering an on-demand, digital financial planner. The company’s blog explains that, “We built Path so you can jump in no matter where you are to see how different decisions could impact your financial future.”

Path’s questionnaire is distinct from the typical robo-advisor “risk questionnaire” of five to ten questions. In fact, the Path interview questions mirror those that a human financial planner might ask. Path is looking to exploit younger people’s preference for digital interactions over vocal conversations.”

“RightCapital’s Betterment Partnership Hints at Advisor Numbers, Growth” by Samuel Steinberger at WealthManagement

“Financial planning software company RightCapital announced a partnership with Betterment for Advisors, opening up a significant growth avenue for the young Connecticut-based firm, founded out of the CEO’s home just 3 years ago. The business agreement marks the culmination of an integration that began a year ago as a way to get the two firms’ technologies to work together.

The announcement also helped illuminate just how big Betterment for Advisors has grown since it launched its advisor-focused business, originally called Betterment Institutional, in 2014. Before the partnership ‘about 100 RIA firms’ were already using both RightCapital and Betterment for Advisors, said RightCapital CEO Shuang Chen. With the new partnership, ‘a few thousand firms’ in Betterment’s advisory channel will be receiving material on the partnership and will have the opportunity to advise clients using the RightCapital financial planning toolkit.”

“TD Ameritrade Adds ESG Investing to Essential Portfolios Robo Advisor” by WealthManagement

“TD Ameritrade is now offering five Socially Aware portfolios on its Essential Portfolios robo advisor, the company announced.

The portfolios will use ETFs that are designed to suit different risk preferences and investing goals.

According to TD Ameritrade’s Socially Responsible Investing Survey, 30 percent of investors surveyed have considered making SRI investments, with 60 percent of millennial’s considering it important.

In addition, 47 percent of millennial’s said they would switch firms to gain broader access to SRI offerings.

Staff columnist Alexandra DeLuise combines her banking experience with real-world financial advice to provide simple money tips to everyday people.

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Barbara A. Friedberg, MBA, MS

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