Automated, algorithm-based investment management, portfolio rebalancing and, to some extent, advice is here to stay; so is digital technology that enables seamless onboarding and back-office efficiency.
Asset management firms need to pay heed to the innovations happening in "fintech" right now, as peers and upstart digital firms provide clients with new ways to invest and manage money, and potentially new business models for the financial industry.
What's happening in the digital space that could impact your business? Here are some of the top moves to watch.
- Schwab
Move: Launch of Schwab Intelligent Portfolios.
Buzz: Financial service giant's reported no-fee digital consumer offering is the most anticipated move in the robo space this year.
Potential Upside: Lure of zero cost (even though Schwab will profit from the piles of money that will end up in cash) freezes market, delivers knockout blow to -to-C pioneers like Wealthfront.
Potential Downside: Either embarrassing vaporware or product lays an egg and is seen as handiwork of old-school company that can't compete with the cool new kids on the block.
- Vanguard
Move: Full-fledged rollout of Vanguard Personal Advisor Services, an online (and human) advice platform.
Buzz: In accelerated beta last year, the platform already has $4.2 billion in assets - so what will growth be when this master marketer ramps up?
Potential Upside: Gobbles up big share of digital marketplace.
Potential Downside: Emphasis on phone calls with advisors turns off the digital-only crowd.
- Betterment
Move: Rollout of Betterment Institutional, the firm's -to-B digital offering to RIAs.
Buzz: Fueled by partnership with Fidelity, this is the biggest, best-funded effort to date to work with, rather than compete against, independent advisors.
Potential Upside: Becomes go-to firm for advisors looking for a robo partner.
Potential Downside: -to-B hottest trend in the space; less differentiation with too much competition; money runs out before Betterment can break even.
- SigFig
Move: Targeting older investors with new high-yield diversified income ETF portfolio.
Buzz: Seen as a counterintuitive shift for a digital platform, but will be watched closely.
Potential Upside: Huge market largely ignored by other robos.
Potential Downside: Could fail to penetrate boomer market and break out of the pack; portfolio may have more risk than advertised.
- Aspiration
Move: New company pitching hedge fund-like investing approach directly to mass market clients.
Buzz: Attention-grabbing features include fund-of-funds approach; letting investors choose their own fee (excluding what money managers get); and donating 10% of "every dollar earned" to charity. Backers include Jeff Skoll, the former head of another once-small startup: eBay.
Potential Upside: Terra incognita for robos.
Potential Downside: Terra incognita for robos.
