News, Vision & Voice for the Advisory Community


How one 'robo-advisor' got $25 billion on its platform with a Mint.com mindset, 401(k) friendliness, a merger and 16 years of work

NextCapital has deals with Barron's, Dow Jones and Russell Investments as part of a brick-by-brick history in a put-up-your-robo-shingle world

Author Kelly O'Mara March 31, 2014 at 4:53 PM
no description available
Rob Foregger left Personal Capital to found NextCapital, which has a rare attribute -- big managed assets.

Stephen Winks

Stephen Winks

March 31, 2014 — 8:06 PM

The missing differentiator of Betterment, WealthFront, Personal Capital, NextCapital and the other 47 Robo Advisors envisioned is the absence of an expert prudent process (Asset/Liability Study, Investment Policy, Portfolio Construction, Monitoring and Management) and the associated technical acumen necessary to execute individualized advice.

In order for advice to be scalable Robo Advisors ignore the most important point, Advice must be built around an expert prudent process ( based on objective non-negotiable fiduciary criteria of statute, case law and regulatory opinion letters) with an accomplished human being to explain it. Process is how expert individualized advice (required by statute) becomes scalable.

Lockchin acknowledges the limitations of Robo Advice via his experience with Betterment. The importance of a definitive expert prudent process with an audit path affirming statutory fiduciary duty is that process trumps technology as process explains what needs to be done. The 50 Robo Advisory firms emerging simply establish what aggregated assets look like as a portfolio (which is of massive importance) but does nothing to tell consumers what each of them must do individually. Unless every consumer wants to be their own counsel, advisors will never be replaced by technology, though important, because explanation will always be required.


Stephen Winks

Stephen Winks

March 31, 2014 — 8:15 PM

I should have noted that account aggregation as a a tool is essential for advice. By definition this means brokerage firms which have yet to demonstrate any interest in the professional standing of their brokers are easily compromised in their ability to add value as they would not know if they did.

The point is account aggregation is a utility, a nice tool, but not advice.


Mike Byrnes

Mike Byrnes

March 31, 2014 — 11:01 PM

The 'robo-advisor’ trend will be an interesting one to watch over the next decade.

I think the financial advisor industry will be disrupted more than most people think! — Mike Byrnes, President of Byrnes Consulting, LLC, www.byrnesconsulting.com

Brian Murphy

Brian Murphy

April 1, 2014 — 12:48 AM

I’m not really sure what the significance of various citings of “$25billion” is here. Correct me if I’m wrong, what you’re talking about is $25 billion in assets reported on – not managed, not even advised on…just reported on. What kind of silly vanity metric is that anyways? Exactly what is it indicative of?

FWIW, my team at Kivalia is delivering a different solution to the 401(k) advice problem…self-administered advice. You may want to check that out as well. Good luck to the team at NextCapital nonetheless – there are a lot of opportunities out there.




June 26, 2014 — 12:06 AM

Ongoing research and merchandise growth performs a serious part in Apple’s enterprise technique, always eager to try a thing new, seemingly generally developing tomorrow’s merchandise right now and sometimes releasing a minimum of 1 new solution per year. It’s got almost turn into a yearly regimen for them to announce their newest goods inside a amazing start event that pulls die-hard Apple followers, frequently travelling from all around the globe to witness the event. And normally in the forefront is their charismatic chief, Steve Careers.



June 26, 2014 — 1:38 AM

A girl searching for that Best Costume seriously have additional than 50%, 60% or perhaps 70% savings the majority of the movie star attire that is accessible at superstar attire. So that as an extra value, picking has been created less complicated to anybody who’s looking for that Excellent Marriage Robe. The various fabulous superstar attire are worn in tangible events by authentic persons! It truly is not in contrast to people today attire seen on line yet are worn that has a mannequin. A girl searching don’t require to request herself from the function that would even suit her! At celeb dresses the operation is done affordably. It is possible to merely find out the superstar which includes specifically the exact same physique as her, browse the movie star dresses that they is placing on and- viola!- a potential candidate for that Ideal Wedding day Gown many thanks to celebrity dresses! All that is just need to be done subsequent this super quick step would be to complete this yet again. Considering the fact that you will see greater than 100s of picture ideal superstar dresses to pick out from, trying to find The best Attire might be as simple as one,two,3!



February 20, 2015 — 9:02 PM

Great article Kelly! It’s the dawn of a new day in the digital investing industry. There’s a lot of talk about the “Robo 2.0” movement as was discussed here- https://www.hedgeable.com/blog/2014/12/we-dont-need-robots-introducing-the-digital-wealth-manager-2-0/

Related Moves

July 11, 2023 at 2:46 AM

Wealthfront cedes to four years of investors clamoring for crypto by taking on expensive third-party vendor that Betterment rules out

The Redwood City, Calif., robo-advisor turned a hard 'no' into a soft 'yes' by dealing with Grayscale and its 200 basis-point-plus fees, which its robo rival in NYC -- also without a crypto path -- finds ludicrous.

August 14, 2021 at 2:20 AM

Second Betterment exec departs as new CEO Sarah Levy orients to her first month on the job and is confronted by personnel matters

Chief operating officer Dustin Lucien is the latest to leave the New York City robo-advisor, one of at least eight positions open as it prepares a push across multiple business lines to ignite growth.

January 19, 2021 at 6:32 PM

Wealthfront's unlikely tapping of Sheila Bair and Tom Curry signals likely push to gain a bank charter, analysts say

The Redwood City robo-advisor's addition of two renowned former chief banking regulators brings legitimacy and guidance that could lead to a margin-fattening bank charter and help solve the robo-advisor's problem of high client acquisition costs.

December 31, 2020 at 4:37 AM

See more related moves

Mentioned in this article:

Portfolio Management System
Top Executive: Andy Rachleff

Betterment, LLC
Financial Planning Software
Top Executive: Jon Stein

RIABiz Directory

The Industry Sourcebook for RIAs

   |    LISTING

RIABiz Directory sponsored by:

Directory Sponsor Logo