The Shakeout of the Roboadvisor Movement


Roboadvisors, the vice (and future) of the wealth management industry.  Whether you love them, hate them or are somewhere in the middle, the robo-advisement category has represented a C-Change in the way the wealth management industry relates to customers and sells products.  The following piece details a new report from Boston-based Aite Group who predicts that robo clients will  jump by over 800% by 2021 and the incumbent firms will eat up 93% of that share.  Uh oh.  There’s a lot of smaller robos – and sector specific ones, too, such as ElleVest which caters to women – that could get left in the dust if this prediction comes to pass.  The biggest winners according to some tech execs, however, will be micro-investing sites such as Acorns, rather than the more traditional robo-advisors.  Why – we wonder?  Short attention spans?  But that’s another story for another day.
(Cindy Taylor/Publisher)

“Vanguard, Charles Schwab and Fidelity will press their advantages in digital advice, but Acorns is driving the sector’s massive expansion.

So-called incumbent firms’ share of the robo advice market will jump to 93% by 2021 from 78% last year, according to a report released last week by Boston-based consulting firm Aite Group. At the same time, the number of digital advice clients will soar by nearly 850% to 17 million by 2021, the study says.

More than half of that growth will come from Acorns. The firm launched an app partnership with Clarity Money in July, and some tech executives at large firms have cited microinvesting firms like Acorns as better models for the future than more-heralded robo advisors like Betterment and Wealthfront…

The more traditional firms like Vanguard, Schwab and Fidelity, however, boast their own ETFs and other funds to create robo-portfolios, Aite Group points out. Vanguard’s hybrid platform, Personal Advisor Services, already dominates the market, and experts foresee more consolidation in the future….”

Full Story at Financial-Planning