Robo-Advisors

Stripped down to its essentials, financial advice is a fairly straightforward proposition. Done well, a highly ethical individual stewards the assets and actions of an investor in a personal and professional interchange. But now a vibrant new class of entrepreneurs is staking their fates and their fortunes on the premise that financial advice can be delivered in a better, cheaper, easier, more ethical, more transparent manner and, as a bonus, in a way more devoid of human annoyance on both ends of the transaction. Cue the robo-advisors, arguably a callous misnomer for automated asset management. The prototypical robo-advisory entrepreneur has more brands on his or her resume than NASCAR. The bona fides of these industry upstarts often include Ivy-level colleges and MBA programs at Harvard or Stanford. They are often flush with IPO dollars realized at concerns like LinkedIn, Facebook, eBay, Amazon and Microsoft. Robo-folk believe that technology is not an enabler of advice but rather, if engineered correctly, advice itself in digital form. And, they believe the best solutions originate in Silicon Valley or academia, not Wall Street. Robo-entrepreneurs are white-boarding the whole business model, culture and technology from scratch in the conviction that little can be learned from a legacy advice system still rooted in an investment banking culture acting under the core premise that if stockbrokers get rich some of the good effects will trickle down to clients – with the clients none the wiser. Robo-advisors are a scintillating topic for students of the advice game as they grow by hundreds of millions in assets every month, constantly evolve their business models and receive cash infusions from ever-larger swaths of venture capitals. Throw in the fact that robo-advisors have yet to see a dime in profits -- and won’t in the foreseeable future -- and you have real intrigue. RIABiz has avidly covered the fast-evolving robo-advice phenomenon and will continue to do so. We present the growing body of articles here.

Andy Rachleff says his firm's price drop is an act of conscience reflecting the good example of Vanguard Group. Some find the explanation hard to stomach.

In robo-CEO vs. Twitter gadfly battle, it was no contest as Wealthfront's Andy Rachleff does 'ultimate flip-flop' without tweeting a reply

The $10-billion robo-advisor may weather 'PR nightmare' but not thanks to Rachleff's 'Vanguard' explanation, critics say

April 25, 2018 — 12:03 AM UTC by Lisa Shidler

Brooke's Note: If you can start up a business without investors, do it. Being an entrepreneur is supposed to be fun but it's hardly guaranteed. The fun of being your own boss dissipates if you answer to the impatient people who own you -- especially ...

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Tom Bradley: I have the opportunity to share in the growth of Max and that's what I'm interested in.

What Tom Bradley's first post-TD Ameritrade gig says about him is interesting and his specific MaxMyInterest robo mission, more so

The non-competed New Jersey exec gets a piece of the action and much boils down to signing a wirehouse, an RIA custodian or an LPL

April 9, 2018 — 5:32 PM UTC by Oisin Breen

Brooke's Note: Were Frank to fire me or were RIABiz to get bought out by the Chinese, my sincerest hope is that some very tough lawyer would make me sign a non-compete agreement -- highly binding -- that took me out of the game for two ...

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Cara Reisman: We want to meet as many needs as possible while still being easy to use.

Betterment reboots its RIA business big-time with new chief, ACATS for ETFs and the ability to fold existing holdings into robo portfolios

Cara Reisman absorbs duties of Tom Kimberley -- then gets to work making the New York robo-custodian more like classic RIA custodians

March 29, 2018 — 12:06 AM UTC by Brooke Southall

Brooke's Note: This was a hard article to write because its topic was one small step for trading and a giant leap for RIAs and Betterment. Luckily I got Betterment's new RIA chief on the line to get the technical story but also ...

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Drew Sievers: [FIS support] is not just a huge moat in the banking business, it's a veritable ocean.

Trizic CEO raises $10M, poaches ex-FolioDynamix COO and luxuriates in 'ocean' of FIS 14,000-bank insider advantage

Drew Sievers vows that firm's five-year plan will make his bank clients massive competitors to Wealthfront and Betterment

March 21, 2018 — 8:13 PM UTC by Oisin Breen

Brooke's Note: The robos-to-bank sweepstakes just keeps heating up -- each with its own giant advantages. SigFig has Randy Bullard. See: Randy Bullard pitches himself into major role at SigFig to add his Placemark knowledge to a robo hothouse. Fidelity has eMoney and its banking relationships ...

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Jacqueline Ko Matthews: They ended up being commoditized in their attempt to disrupt.

No sooner does hedge fund take big Wealthfront stake than the robo pivots toward becoming one

Tiger Global brought $75 million of cash in January but the New York hedge fund's baggage of higher fees, hard-to-grasp fees, PhD investing may have been quickly transferred, too

March 7, 2018 — 11:26 PM UTC by Lisa Shidler

Brooke's Note: Us reporters covering disruption of the financial advice business are like Charlie Brown going at Lucy with the football.  We get told -- in the most impassioned terms -- about how the entrepreneurs at a startup are "democratizing" this or that in investing. The ...

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Roger Lee (r. w/Paul Sawaya): Rather than just sit on top of Fidelity, we took on a challenge that was a little bit bigger.

Unknown San Francisco 401(k) robo with famous backers gets $11 million more in VC funding -- and an interesting brand

With Y Combinator start, Human Interest, formerly Captain401, is only in its third year but 10,000 customers convinced Adam Nash, Joe Montana and Sequoia-, Accel-derived VC

February 8, 2018 — 12:10 AM UTC by Brooke Southall

Brooke's Note: Doing a robo-advisor startup in 2015 seems late so you'd better get the branding right. This little robo, Captain401, is checking every branding box. The first challenge is to find a founder who went to Harvard. Check. Next is for the fledgling startup ...

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Rob Foregger: John Hancock is the first to do it.

NextCapital does $30-million VC round with a staggering objective that's taking shape first with John Hancock

Nearing 100 employees, the Chicago-based robo-advisor blurs 401(k) and retail asset distinctions by making advice factories out of investment product manufacturers

January 16, 2018 — 8:06 PM UTC by Lisa Shidler

Brooke's Note: When I caught up with Rob Foregger during the editing stage of Lisa's article he exuded an unhurried urgency when talking about cofounding his second robo-advisor from his Vermont home. See: Personal Capital gets $75 million investment and an ex-Schwab retail chief in ...

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Sitting on an extra $75 million of VC cash, Andy Rachleff can see an IPO in the distance

With hedge fund help, Andy Rachleff buys Wealthfront $75 million of time and swaps out 'robo-advisor' moniker he reviles for his own coinage

Tiger Global PE unit's cash buoys CEO of Silicon Valley who recategorizes his robo as 'software-only' and gives it new life in contending with front-running Betterment

January 10, 2018 — 8:12 PM UTC by Brooke Southall

Brooke's Note: Only a few short years ago, Wealthfront jumped out to a lead in managed robo assets and its CEO Andy Rachleff played the frontrunner role to perfection, predicting that one big gorilla would take all much the way Facebook, LinkedIn and Google ...

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Tim Buckley: Our clients should expect change. They should expect significant change.

Vanguard's new CEO Tim Buckley hints the next move for his firm's RIA's 30-basis-point fee may be down, down, down

As the Malvern, Pa. fund giant's VPAS passes the $100-billion mark it doesn't rule out automated advice or greater robo-ization to follow asset management fee play where cost savings get passed along

January 8, 2018 — 10:22 PM UTC by Lisa Shidler

Brooke's Note: That was fast. We listened to Vanguard's Tim Buckley in his first public appearance since becoming CEO Jan. 2 for hints about how he intends to make his mark on the firm in 2018. The $4 trillion asset manager he now ...

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Sallie Krawcheck: He proceeded to give me chapter and verse on how financial advisors are hard to manage. (Photo credit: WBUR)

Robo-advisors hit lull in everything but VC backing as reality fragments their identity

A Silicon Valley venture capitalist lectures Sallie Krawcheck on drawbacks of human advisors after she explains she needs capital to hire some

December 11, 2017 — 9:43 PM UTC by Brooke Southall

Brooke's Note: Here's a blast from the past: robo-advisors. First we were hearing about how they'd take over the RIA business. Then we heard how they'd reinvent it by allowing advisors to keep a side book of business of micro-accounts. Now we ...

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Gary Zimmerman:  My wife was worried about whether I'd lose my job, but I wasn't worried. I was worried about all of our cash.

Citi exec 'accidentally' invents cash-robo with 400 RIAs as distribution channel

Gary Zimmerman scrambled in 2009 from Tokyo to shield millions in uninsured cash, leading to MaxMyInterest, which RIAs now use to automate process of getting $5 million under FDIC protection -- and often earning an extra 100 basis points in the bargain

December 7, 2017 — 8:00 PM UTC by Oisin Breen

Brooke's Note: Back around 2015, Gary Zimmerman paid a visit to RIABiz headquarters in Mill Valley and we sat down in the conference room for an hour. In moments he had me and local colleague Michael Halloran riveted with the Michael Lewis-worthy story of him ...

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Mark Matson: They've gone from smart beta is stupid to we're the ones that can pull it off. It's hypocritical at best and they're applying it completely wrong.

Wealthfront calls its smart beta approach 'superior' to Dimensional Fund Advisors largely because DFA works with RIAs

The Redwood City-based robo-advisor's CIO Burton Malkiel says his firm's robo-approach to factor investing convinced him to reverse his stand on passive investing as unbeatable

November 17, 2017 — 2:21 AM UTC by Brooke Southall

Brooke's Note: The headline of this article could just as easily be: "Wealthfront goes smart beta by getting its chief investment officer to renounce the basis of his fame and put chimps with darts back in their place." The action in this story happened back ...

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Lowell Putnam: It ensures everything on both sides of the transaction is 'fit for purpose,' meaning it's just down to the National Securities Clearing Corp.-DTCC to do the necessary work..

Quovo is developing an ACATS rooter process with Apex Clearing as first to sign on

The Silicon Alley startup is using its data science as a way of attacking a clog considered not susceptible to intervention

November 14, 2017 — 11:09 PM UTC by Oisin Breen

Brooke's Note: When you are a tiny startup competing in a field of giants, you have two choices. You can go low with a microniche or go high and provide a product above and beyond what the giants do because they are stymied by innovator's ...

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Robert Goldstein will get his turn at figuring out how to make FutureAdvisor into a winner.

BlackRock may build the biggest, baddest RIA platform yet as 'Boy Wonder' begins 'Aladdin-izing' FutureAdvisor

Since its acquisition in 2015, crickets for the $152-million robo-advisor, but under young legend Rob Goldstein, that could all change as BlackRock rolls out its play to own the advisor desktop

November 7, 2017 — 8:39 PM UTC by Brooke Southall

Brooke's Note: BlackRock more than turned heads when it bought FutureAdvisor in 2015. It was enough that a $6-trillion asset manager suddenly owned a California-based asset that could distribute straight to investors -- and where a reporter's black lab was allowed free reign during an ...

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Eli George: Surprisingly, a lot of the firms $1 billion and more were coming to us.

SS&C solves its Axys problem -- for now -- by acquiring Modestspark

The owner of Advent and Black Diamond buys tiny two-person Redmond, Wash. firm that also solves Schwab's PortfolioCenter problem with digital add-on

November 2, 2017 — 11:00 PM UTC by Brooke Southall

Brooke's Note: No matter how many times it happens we are still somehow shocked that bigger companies can't solve big software problems. It always seems to be a handful of individuals who make breakthroughs not teams of experienced engineers with fat salaries. Case in point ...

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