Tag: Robo Advisor

Posted on September 27, 2019

The term “Robo-Advisor” has become commonplace to describe a new breed of digital investment management solutions. Although there is not an official definition for the term, robo-advisors share a few key characteristics. Mainly, they are automated platforms that provide investment and financial planning services. Created in response to the lack of access to traditional advisors amongst less affluent investors, robo-advisors lower the cost and ease of investing in a professionally managed, globally diversified portfolio. They do this by leveraging algorithm-driven technology in the client management and investment selection process. 

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Posted on September 21, 2019

When digital investing was first introduced, platforms quickly began accumulating assets. Digital advisors were labeled industry disruptors, as talks of fee compression, the commoditization of professional asset management, and disruption of the investment advice industry ran rampant.  Digital advice providers had the advantage of emerging during a historic multi-year bull market. Over the last four years, the market has continued to mature, adoption has spread across major financial institutions, and new consumer trends have emerged. An increasing number of companies are battling for market share and institutions have developed their own offerings.  In the race to achieve scale, the largest independent advisors continue to expand product offerings to stay a step ahead of incumbent players and maintain impressive rates of asset accumulation.  

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Posted on May 30, 2019

SoFi has been making headlines this month, as they have recently introduced two proprietary ETFs.  The funds are as follows:

  • SoFi Select 500 (SFY) tracks the performance of 500 of the largest U.S.-listed companies weighted based on a proprietary mix of their market capitalization and fundamental factors
  • SoFi Next 500 (SFYX) tracks the performance of the 500 smallest of the 1,000 largest U.S.-listed companies weighted based on a proprietary mix of their market capitalization and fundamental factors.

SoFi continues to diversify their offerings, as they have also recently announced a partnership with two fintech insurance firms.  SoFi now plans to offer homeowners and renters insurance through Lemonade and auto insurance through Root. This has been a busy month for Sofi, as they are rumored to be working on an additional round of funding, estimated as $500M.  This funding round, reportedly led by the Qatar Investment Authority, is expected to be at a similar valuation to their last round in February 2017.

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Posted on May 28, 2019

“The SEC announced in December that it reached a settlement agreement with two robo advice providers.”

As robo advice grows rapidly and reaches widespread adoption, they are also catching the attention of regulators.  The first SEC action against providers occurred at the end of 2018, as the SEC announced in December that it reached a settlement agreement with two robo advice providers. The SEC order stated that Wealthfront claimed to be monitoring outside accounts for wash sales related to their tax-loss harvesting product when, in fact, they were not. The SEC announcement reported that 31% of accounts enrolled in tax-loss harvesting experienced a wash sale in the more than three years that Wealthfront made this claim. Other findings included re-tweeting prohibited client testimonials and paying bloggers for client referrals without the proper disclosures and documentation.

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Posted on May 26, 2019

We recently spoke with Dave Nugent, Head of Investments and part of the founding team at Wealthsimple, a Canada-based robo that has expanded to the U.S. and U.K. markets. Dave provided us with great insight into who the typical Wealthsimple client is and where he sees the future of digital advice.

“Over the past two years, we have seen a trend in the robo advice industry away from digital-only offerings toward offering access to live advisors at some level of service”

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Posted on May 23, 2019

Cash management products spread across direct-to-consumer fintech platforms

The digital advice industry continues to evolve in 2019. Cash management apps, linked debit cards, and high-yield savings accounts are sweeping across direct-to-consumer fintech companies. Wealthfront announced their high-yield savings account this quarter, following Betterment’s cash management program announcement late last year.  Meanwhile, Robinhood released their high interest account last December, although it was quickly shelved after regulagatory pushback.

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