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2017 Robo-Advisor News – The Most Useful Fintech Updates

Last Updated on September 8, 2017 by Barbara A. Friedberg, MBA, MS

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Robo-Advisor News – September 2017

The robo-advisor news waves are exploding with questions about the future of this fintech darling. Not far behind is the cry of human financial advisors wondering if they will be doomed. Find out what the CFA blog, MarketWatch and the Wall Street Journal are reporting about these questions.

Robo-Advisor News September 2017. Updates about the future of robo's + financial advisors.

“What’s Next for Robo-Advisors?” by Lauren Foster – CFA Institute Blog

“If you’re in the business of advising clients on how to invest, Randy Cass, CFA, has some advice for you: The future of the investment management industry is online and you will render yourself obsolete if you don’t figure out how to add value beyond just overseeing portfolios.

In fact, he sees a turning point on the horizon, a “Turing test,” when artificial intelligence (AI) wins and clients can no longer determine whether their online wealth manager is human or computer.

“In two years, I will bet you, you will think you’re being managed by an individual and have no clue that the messages, emails, prompts, and alerts you’re getting — because they’re so personalized and customized — are actually being generated by a system,” Cass told delegates at the CFA Institute European Investment Conference. This will free advisers to focus on all those other areas where they can add real value.”

“How human financial pros can up their game to compete with robo advisers” by Robert Powell – MarketWatch

“Not all robo advisers are created alike. In fact, there’s a wide disparity between them, according to Joel Bruckenstein, publisher of T3 Technology Hub, one of four experts who participated in a MarketWatch panel discussion on the topic in Boston on April 5. “And I’m not sure it’s well understood by the public or advisers yet.”

The good news is that financial advisers and investors in general can pick and choose what type of robo advice with which to work. “At one end of the spectrum you have the rock bottom (robo adviser), which is where you are going to get an asset allocation that’s pre-determined for you, which may or may not have rebalancing or tax-efficient rebalancing, but it’s going to be very cheap. It’s going to be funded by ETFs that are also very cheap, and your all-in cost will be really minimal,” Bruckenstein said during the panel discussion. “And at the higher end, you may have some smart-beta ETFs that cost more. You may have some more bells and whistles in there as far as different strategies for trading.”

“Your Robo Adviser Is More Active Than You Think” by John Coumarianos on WSJ.com

“Robo advisers aren’t as mindless or interchangeable as their name makes them sound.

The idea behind these vehicles is to save investors money through simplicity and automation. Robo advisers put together portfolios of inexpensive index funds, and then keep the allocations steady via computer programs or algorithms. The implicit understanding is that a human overseer won’t be making choices about how the funds are managed.

But there’s a crucial step here that isn’t always obvious. Algorithms manage the portfolios, but they don’t choose what goes into the portfolios in the first place. People do.”

“2017 List of Robo-Advisors – Top 28 Digital Investment Managers” by Barbara A. Friedberg – Robo-Advisor Pros.com

“Robo-advisors have become extremely popular in the investment management sphere. This list of robo-advisors includes an introduction to the 28 top digital investment services. Also, you’ll find quite a bit of differentiation within the list of robo-advisors.

You might wonder why you need a robo-advisor. Here are the practical reasons for using a robo-advisory service for your investment management:

  • You’re busy and you want your money professionally managed.
  • You’re drawn to the promise of sophisticated investment management services for a low fee.
  • You want to invest for a secure financial future and you need guidance.

This list of robo-advisors shows that the field is exploding with choices and options. So, with the preponderance of digital financial advisors, a robo-advisor meant to simplify your life can turn out to complicate it, if you’re spending hours trying to choose the correct service.”

“Rating the Robo-Advisors” by Alex Eule – Barrons.com

“By tech start-up standards, robo-advisors are already approaching middle age. Betterment, the pioneering robo-advisor and still the largest of the independent firms, turned seven in May. It now has $9.1 billion in assets under management.

“The digital independent start-ups are adding human advisors, and the existing advisory firms are adding software, and we’re all ending up in the middle,” says Bo Lu, who co-founded robo FutureAdvisor in 2010 and continues to run the business, which was acquired by BlackRock in 2015.

For consumers, the middle is a good place to be: low-cost funds, managed by low-cost advisors.”

Vanguard, Schwab Squashing Robo-Advisor Industry, Report Says” by Christopher Robbins – Financial Advisor.com

“Vanguard and other large financial firms are gobbling up robo-advisor market share, squeezing out smaller firms that pioneered the industry, according to a new report.

The amount of assets managed by U.S. robo-advisors is poised to quadruple over the next five years, but independent digital advice providers are unlikely to benefit as larger, established firms attract the lion’s share of the assets, according to the report by S&P Global Market Intelligence.

The report predicts that digital advice assets will grow from $98.52 billion at the end of 2016 to $460.46 billion at the end of 2021.”

Robo-Advisor News Wrap Up

The hot trends in the robo-advisory sphere are:

  • Adding the human touch to the robo-advisor automated investment algorithms.
  • Schooling human financial advisors to compete with robo-advisors.
  • White labeled robo-advisor platforms for human advisors. They’re on a tear.
  • The big box brokerages; Schwab, Vanguard, TD Ameritrade, E*Trade and others are trouncing the stand-along robos.

The story continues to be written as this fintech robo-advisory industry grows at lightening speed.


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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