“Are a confluence of societal factors and technical advances set to propel the robo advisor trend even further?
There are numerous points at which financial innovation has frightened traditional mechanisms on Wall Street. In 1974 when Vanguard’s John Bogle made the first stock index fund available to retail investors, who were then paying near $90 commission on a stock trade, a closed industry opened up. A 1975 SEC ruling that prohibited securities exchanges from fixing brokerage commissions opened the door to the discount broker and a host of firms, many using the Internet as a customer portal, found new opportunity. Old school stock brokers generating over sized commission to equity ratios went the way of the buggy whip. Now with new fiduciary standards and artificial intelligence emerging, a new threat is emerging: The robo advisor.
Not since the advent of low-cost brokerage firms has the traditional wealth management industry faced as great a challenge to its very existence as it does with the emerging popularity of robo advisors, a 137 page June report from Financial Technology Partners observes.”