Robo advisors’ prime directive: be everything to everyone

Low-cost digital finance platforms are looking to expand their client bases by widening their shelf of services

Robo advisors’ prime directive: be everything to everyone

Commission-free trading. A hybrid spending and savings account. Tax services. Automatic investing.

Those are just some of the features and services that Wealthsimple has announced or rolled out in the past couple of years, in a hardly concealed push to be a one-stop financial service for clients.

“We want to be the primary financial relationship for our clients,” Wealthsimple CEO Michael Katchen told Wealth Professional in January. “We think that the industry is changing, expectations are changing, and there is this once-in-a-generation opportunity to acquire a whole generation of clients that are looking for something different than their parents or grandparents [had].”

His firm isn’t alone… at least, not when you consider the robo advisors servicing clients in Canada’s neighbour to the south.

As reported by the Wall Street Journal, robo-advising firms have expanded over the past 10 years to include other low-cost, accessible financial services. The goal: to expand their customer base, which necessarily means getting a bigger slice of the retail investor market.

“Robo advising has grown to a $600 billion-plus market that includes cash accounts, financial advice, lending and retirement services—attracting a wider variety of investors than ever,” the Journal said.

The list of U.S. robo advisors includes companies like Acorns, Betterment, Personal Capital, and Wealthfront. Their financial products and services — all offered at low cost — cover no-frills checking, high-interest-rate savings accounts, automatic savings and investment, and event basic financial planning. A spokesperson for Wealthfront described an upcoming “self-driving money” services suite, through which the account holder can allocate every dollar they deposit into bill payments, investments, loan payments, retirement, or savings buckets as they see fit.

Some robo-advising firms are trying to draw a more niche crowd of investors looking to put their dollars where their values are. One firm, Newday Investing, lets individuals choose what impact area they want to focus on — gender-lens investing, sustainable real estate, ocean health, and so on — then generates a portfolio that would suit that objective. Another firm that targets women, Ellevest, has reportedly expanded beyond investment advice and financial planning to also offer career coaching.

“Investment minimums for robo-adviser accounts at the more-established financial firms … can be more than $10,000,” the Journal noted. At that price, clients of Vanguard and other firms with hybrid advice services stand to get a higher level of financial advice than what’s provided at more-accessible price points. That includes the possibility of speaking directly with a human advisor.

Ken Schapiro of Backend Research, which provides intelligence on the robo market, told the news outlet that he expects more-traditional firms to offer cash accounts. More broadly, he expected firms to go “all in” on improving apps and bolting on services.


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