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Everyone Wants a Robo-Advisor, Right?




Is the financial technology sector in a bubble? Are there too many terms like smart beta and robo-advisors? Apparently not, and the concept of robo-advisors is gaining traction as another way for asset managers and technology-centric service providers to channel their products through sleek graphical user interfaces (GUI). Strategies and consultancy firms profess a trend that younger, affluent investors prefer online advice and lower fees versus hiring a flesh-and-blood financial advisor. The question looms, will computed online advice become a standard expectation for wealth management?

Robo-advisors are a type of financial advisor that provides web-based portfolio management with almost zero human intervention.

To meet the current demand, asset managers are combining elements of robo-advisors with their current offerings. For example, in May 2015, Vanguard rolled out their robo-advisor service. Other asset managers are buying robo-advisors. In August, asset management goliath BlackRock acquired San Francisco-based FutureAdvisor, an automated investment service. FutureAdvisor will be under BlackRock Solutions, the firm’s investment and risk management unit. The startup was founded in 2010 and raised a tad over US$ 20 million from venture capital firms such as Sequoia Capital and Kapor Capital.

SWFI Robo Advisor League Table

See full rankings (all fields)

Company Product HQ Assets Under Management in USD (not parent company) Fees and Costs
Charles Schwab Schwab Intelligent Portfolios San Francisco, CA 3,000,000,000 No advisory fees, Schwab affiliates do earn revenue from the underlying assets in Schwab Intelligent Portfolios accounts. Revenue may also be received from the market centers where ETF trade orders are routed for execution.
WealthFront WealthFront Palo Alto, CA 2,612,809,400 0.25% of assets after first US$ 10,000.
Betterment LLC Betterment New York, NY 2,603,268,353 0.15% to 0.35% of assets.
Vanguard Vanguard Personal Advisor Services Malvern, PA 2,400,000,000 0.3% of assets.
Personal Capital Personal Capital San Francisco, CA 1,518,220,789 0.49% to 0.89% of assets
AssetBuilder, Inc. Asset Builder Plano, TX 686,369,069 0.20% to 0.45% of assets, depending on balance, plus trading costs.
BlackRock FutureAdvisor San Francisco, CA 232,124,148 0.5% annual fee on investable assets
SigFig Wealth Management, LLC SigFig San Francisco, CA 70,000,000 0.25% of assets after first US$ 10,000.
Hedgeable, Inc. Hedgeable New York, NY 35,216,393 0.3% to 0.75% of assets
Foliofn Investments, Inc. Folio Investing McLean, VA   Many options, main is US$ 29 per month
Total Assets     12,458,008,152  
Traditional Asset Management Firm       0.75% to 1.5% on assets, plus fees.

Updated: August 2015, Data: Regulatory filings and company research  

What is a Robo-Advisor?

Robo-advisors are a type of financial advisor that provides web-based portfolio management with almost zero human intervention. These online advisors typically use algorithms and formulas to conduct portfolio management. In the United States, robo-advisors must be registered investment advisors. Furthermore, many of these “advisors” will select low cost exchange-traded funds (ETFs), smart beta funds or index funds to invest into. This disruptive wave has put some traditional human advisors on the defensive.

Why the Demand?

Is their excess hype over what a robo-advisor is? This isn’t R2-D2, it’s essentially website code that offers automated advice on fund selection, asset allocation, rebalancing and tax-loss harvesting. The wealth management market is being disrupted for several reasons. Technology and lower barriers of entry have permitted wealth management “customized” solutions for mass market consumers (people with less than US$ 200,000 in investable assets.) Furthermore, the reduction of fees and perceived control over investments appeals to younger demographics according to numerous surveys.

Robert Priestley Exits Future Fund and ASX Boards



Robert Priestley who was a member of Australia’s Future Fund Board of Guardians has resigned. He is the former the Chief Executive Officer of J.P. Morgan Australia and New Zealand (left in May 2017). He also resigned from his director role at ASX Limited. Priestley remains the non-executive chairman of J.P. Morgan Australia and New Zealand.

In a released statement by Priestley, he said, “Given my decision to step aside from the ASX board, I think it is also appropriate that I step aside from the Future Fund board of guardians.”

Australia and New Zealand Banking Group Ltd (ANZ) is in hot water with Australian regulators, facing criminal cartel charges on an ill-fated institutional placement. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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SWFI First Read, June 20, 2018



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Keppel Corporation Sells Stake in Development

Shenyang SUNAC Xinxing Enterprise Management acquired a stake for US$ 43 million in the Keppel Township Development (Shenyang) Co. Ltd. from Keppel Corporation.

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Mauritius Aims to Sell Citizenship and Passports to Bolster National Wealth Fund



The island country of Mauritius plans to offer foreigners a chance to obtain country citizenship in exchange for a non-refundable contribution of US$ 1 million to the national sovereign wealth fund. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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