The Robo-Advisor Competition Lost Two More Niche Players
Since the close of Hedgeable last summer, new robo-advisors have launched. But, gaining customers and competing against legacy platforms like Betterment and Personal Capital is another matter. This summer, active investing hedge-fund robo-advisor Qplum closed it’s doors. It’s founders, idealists Mansi Singhal and Guarav Chakravorty, wanted to open the doors of hedge fund investing to the masses. Their platform was built on years of success in high level financial circles. Unfortunately, their goal was halted, like many others in this competitive field.
The Swell Investing app had the backing of insurance company Pacific Life and still couldn’t make a go of it. Acquisition costs are great. And it didn’t help that Swell’s .75% management fee was higher than most robo-advisors. In fact, with M1 Finance, investors can tap socially responsible investments with zero investment fees.
What do these closures mean for the future of robo-advisors?
Well, the competitive environment hasn’t stopped new platforms from launching. Titan Invest recently launched with another hedge-fund like investing platform. Although, this app also has a high-ish management fee, with just four referrals, you can eliminate the management fee for life! We’ve talked with the founder and reviewed the app, and found that there’s a lot to like.
For investors seeking replacements for active investing Qplum robo or the socially responsible Swell Invest, there are ample candidates.
We have a complete list of active investing robo-advisors.
And, socially responsible, impact investing is becoming so popular that it’s difficult to find robo-advisors who aren’t offering this alternative. Here are a few of the digital platforms with socially responsible robo-advisors.
I’m often accused of being a fan of platitudes, yet, there’s a reason that they work. Nothing becomes a platitude unless it contains an element of truth. So, true to form, the loss of these two robo-advisors just shows the reality of change and innovation. As new platforms evolve, older one’s will close. Change is inevitable. Finally, it’s quite difficult to comepete against the entrenched legacy robo-advisors.
As Swell and Qplum close their doors, JP Morgan’s You Invest Portfolios and Voya are launching their robo-advisors.
JP Morgan Joins the Robo-Advisor Fray and More Fintech Robo News
“JP Morgan is rolling out a robo-adviser with free ETFs to lure new investors” by Hugh Son at CNBC
“J.P. Morgan Chase is making another bid to persuade banking customers to invest with the firm – this time, with a low-cost robo-adviser.
After a year of fine-tuning, which included user trials at 27 branches in Brooklyn, the New York-based bank is releasing on Wednesday a digital investing service called You Invest Portfolios. For an annual fee of 0.35% of assets, or 35 basis points, J.P. Morgan will put users into an investment portfolio made up of the bank’s exchange traded funds, or ETFs.
Choose a robo-advisor in under one minute: ROBO-ADVISOR SELECTION WIZARD
“Digital Advisors Thrive, Defying Industry Pessimism“ by Sean Allocca at Financial Planning
“It wasn’t too long ago that the diagnosis for most independent hybrids and robo advisors was terminal. But thanks to consistent client asset infusions, a number are managing to thrive.
Personal Capital is the latest digital-first wealth manager to topple the $10 billion assets under management milestone — joining Betterment and Wealthfront as the third online independent to amass assets above the marker. The Redwood, California-based firm offers free planning software on the internet, with the goal to upgrade prospective clients that have more than $100,000 in investable assets to premium products. Assets ballooned 60% since the fourth quarter of 2018, taking in $2 billion, according to the company.
The fate of some upstarts is still reason for caution among independent shops. All four robo closures in recent months were startups, according to the Aite research. Due to valuation considerations and the fact that almost all the major incumbents already offer digital financial advice, the road to continued growth for many independent robos may get rockier, experts say……”
“Need a Robo-Advisor? Bambu Can Build You One” by Renato Capelj at Benzinga
“In 2016, Ned Phillips, along with Aki Ranin and Luke Janssen, founded Bambu to address robo-advising in a new way.
The fintech CEO elaborated on how Bambu is aiming to democratize financial planning.
‘The Building Blocks’
“We don’t have a robo-advisor; we have the building blocks for robo-advisors,” Phillips told Benzinga.
Bambu specializes in delivering customized robo-advisor platforms via use of proprietary algorithms and data sets. The company combines independent modules to develop client-advisor dashboards that enable portfolio-building, tracking and balancing according to personalized risk profiles, behaviors and goals……”
“Voya Financial Voyages into Hybrid Robo Advice” by Bernadette Berdychowski at Financial-Planning
“Voya Financial is going robo, the second major player to do so last week.
The announcement of the platform, designed to help its advisors become more efficient and better communicate with the broker-dealer, comes a few days after JPMorgan Chase rolled out its new portfolio offering, You Invest Portfolios.
Financial advisors often turn to robos to help broaden their client bases since they can be entry points for new investors, says Andre Robinson, Voya’s head of Advisory Solutions.
Voya’s move is “clever,” says Jen Butler, the director of brokerage research at Corporate Insights. “It’s a way for their advisors to move downstream.” The firm’s hybrid model will have an advantage because it’s not a direct-to-consumer, Butler adds. The robo will offer active investing options, which can mean higher fees. “It’s higher than most hybrids. Investors are more likely to get a higher-touch experience,” Butler says……”
“Here’s Raymond James’ Approach to the Subscription Advice Model” by Mrinalini Krishna at Financial Advisor IQ
“Raymond James does not expect the industry to rush into the subscription advice model; however, CEO Paul Reilly told reporters last week that the firm’s “not closed to it.”
“I think the market will dictate what clients want, how they want to pay for things. I don’t see any sudden movement to it,” Reilly said. “I think for millennials or young people … it’s probably a good model today. I think for the people with any kind of worth, net worth I don’t think it would be a high take-up today. But that could change over time.”
With Charles Schwab’s four-month old subscription model racing to a billion dollars in assets last week, many in the industry are questioning if that is the way forward. While he wonders how much advice clients could get for a couple of hundred dollars, Reilly thinks there could be variations of the model, perhaps tiered, that could extend beyond the realm of investment management……”
“Ritholtz Wealth Moves Robo Service to Betterment Platform” by Jessica Mathews at Financial Planning
“Ritholtz Wealth Management is relaunching its robo-advice service using Betterment for Advisors’ platform, according to news reports.
Liftoff, as Ritholtz Wealth’s robo-advice platform is called, has no minimums and charges 50 basis points, split between Ritholtz Wealth and Betterment, Ritholtz Wealth CEO Josh Browntells the publication.
Betterment has been taking steps to lure larger RIAs to its platform, adding ACATS transfers for transferring securities from other brokerages; adding Dimensional Fund Advisors mutual funds; improving its dashboard; and adding commodities and more customization for allocation, InvestmentNews writes. Ritholtz Wealth opted for Betterment’s service for its technology and investment philosophy, Michael Batnick, Ritholtz Wealth director of research, tells the publication……’”
More Robo-Advisor News from Robo-Advisor Pros:
- Betterment EveryDay Replaces Betterment Smart Saver
- Robo-Advisors Latest News – Vanguard, SoFi, + Citi Wealth Advisor
- Best Roboo-Advisor Returns YTD – June 2019
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.