Robo-Advisor News + Updates

Robo-Advisors Latest News – Vanguard, SoFi, + Citi Wealth Advisor

Are Robo-Advisors Good in Volatile Markets?

By staff columnist, Alexandra Deluise

One of the biggest questions about robo-advisors is whether they will stand the test of time. As Sean Allocca from Financial Planning notes, the bull market has turned volatile leaving some to wonder about the ability of robo-advisors to handle the downturn.

Yet many financial professions believe the potential threat to robo-advisors lies in the investors who use them instead of in the platforms themselves.

The reason for this is investors may be prone to making emotional decisions about their investments, particularly when they don’t have a human financial planner easily available to advise them or offer support in a slower market.

However, other financial professions aren’t sold on robo-advisors’ ability to survive in a bear market and believe that human financial planners are the way to go. Luckily, there are many options for investors who want robo-advisors with human counterparts and actively-managed portfolios.

From new robo offerings to subscription services, the latest robo-advisor news has been mostly lucrative for the robo-advisory industry—with just a hint of trouble for one well-known company.

Citi Joins the Robo-Advising World

Citi Wealth Advisor, a new digital financial planning platform by Citi, is one of the latest offerings in the digital financial sphere. Investors choose their financial goals and the platform helps create a unique roadmap to those goals. Citi Wealth Advisor is only available to Citigold program clients at this time.

SoFi’s “No Fee” ETFs Cost Customers

When SoFi promoted two new no-fee ETF options for customers, they weren’t exactly clear what this change would cost customers in taxes. As it turns out, clients are more than a little miffed and for good reason. These ETFs were purchased by liquidating other assets—hence the tax bills—and some more vocal clients claim that SoFi did not give them the option to opt out of the trades.

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Robo-Advisors: More Than Investment Services

More and more robo-advisors are beginning to offer financial products that go beyond the investment portfolio management services we have come to appreciate. Bernice Napache from ThinkAdvisor reports that not only are robos beginning to offer more traditional banking services, like checking and savings accounts—robo-advisor experts also see lending as the next step in robo offerings.

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Robo-Advisor Technology for Human Financial Planners

Vanguard is making moves to offer their robo-advisor technology to financial advisors, joining robos such as Betterment and Schwab in this decision.

This offering is a hybrid robo-advisor that combines all the technological powers of a robo with the benefits of working with a human financial planner. Vanguard will provide instruction on how to use the tools so that advisors are sure to be familiar with the business model and can provide quality service to their investors.

Robo-Advisors: The New Subscription Service?

From automatic recurring deliveries on Amazon to our movies and music, subscriptions are just a part of life. So we really shouldn’t be surprised that robo-advisors are starting to roll out subscription services as well.

Schwab is the first robo-advisor to implement subscription-based account management fees, which Barbara Friedberg at U.S. News Money argues is a good thing. The subscription model is familiar to most people, for one thing. For another, having a set monthly fee means that investors know exactly what they will pay no matter how much their account value grows.

investment advisor news

Investment Advisor News is Flooded With Robos

“Robos Survived A Volatile Year. What Happens When It’s Worse?” by Sean Allocca at Financial Planning

“Buoyed by a decade-long bull market, robo advisory firms have made significant inroads in the U.S. wealth management market since the financial crisis — assets on digital platforms are now expected to top $1 trillion by next year.

But 2018’s shaky performance suggests the young upstarts may have an Achilles heel. The vast majority of digital firms have not experienced a full market cycle. Fears are rising about how the tools will perform in a downturn. In a slumping market, will clients continue to invest in automated platforms that almost exclusively track passive investment products?…..”

“Citi to Roll Out Digital Financial Planning Platform” by Alex Padalka at Financial Advisor IQ

“Citi has unveiled a digital financial planning platform for some of its clients, aiming to help them stay on track with their financial goals while allowing advisors to ‘recalibrate’ the clients’ financial plans, the company says.

Citi Wealth Advisor, as the platform is called, lets clients pick their financial goals in order to set up a financial roadmap, which allows for ‘what if’ scenarios for both controllable and uncontrollable events, Citi says in a press release……”

“SoFi’s No-Fee ETF Launch Saddles Some Customers With Tax Bills” by Asjylyn Loder at The Wall Street Journal

“Social Finance Inc. says it exists to help users take control of their finances. But the firm’s launch this month of two no-fee exchange-traded funds stands to hit some customers with unexpected taxes.

The San Francisco financial-technology firm last week launched two SoFi-branded ETFs that offer broad exposure to different slices of the U.S. stock market……”

“The Next Frontier Robo-Advisors Are Attacking” by Bernice Napach at ThinkAdvisor

The latest advisor news shows, “The robo-advisory industry is moving into its next phase, from disrupting traditional financial advisory services with cheap, passive asset management and low minimums, to taking on traditional deposit banking with cash management and saving products.

‘We’re starting to see the early phases of an evolution,’ said David Goldstone, analyst at Backend Benchmarking, which publishes The Robo Report.

Its latest edition, which covers the first quarter of 2019, is filled with examples of these offerings, though some predate that quarter……”

“Vanguard to Roll Out Robo Technology to Advisors” by Jessica Mathews at Financial Planning

“Following the initial success of  the Vanguard robo-advisor direct-to-consumer product, financial planners can expect access to the technology in the future, according to Tom Rampulla, head of Vanguard’s Financial Advisor Services division.

‘We’re getting a lot of requests from [advisors] to perhaps use that technology with them, so we’re in the process of working on that,’ Rampulla tells Financial Planning. ‘We’ll be rolling that out at some point to give [advisors] the ability to use technology that has been proven to help with their business — different types of software to do their business and make them scalable……’”

Robo-advisor Vanguard is the largest digital investment advisor with $115 billion in assets under management.

“Why Robo Advisor Subscriptions are Good” by Barbara Friedberg at U.S. News and World Report

“If you believe some tech entrepreneurs, every business will become a subscription model in the future.

In a recent interview by Jenny Luna for Stanford Business, Tien Tzuo, founder and CEO of Zuora, posits that the subscription model is the wave of the future and benefits corporations with a steady revenue stream. He suggests that any business can use this model.

A do-it-yourself investor, might begin with several thousand dollars and invest in stock and bond funds at Charles Schwab, Fidelity Investments, TD Ameritrade or another investment house. As the portfolio grows to five figures, the DIY investor may seek other financial guidance. That’s where low-cost financial planning comes in. In contrast with typical human advisors who require hundreds of thousands of dollars and charge 1% or more in management fees, paid subscription robo advisors offer a low-cost alternative……”

More Robo-Advisor News from Robo-Advisor Pros:

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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

Barbara A. Friedberg, MBA, MS

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