LAGUNA NIGUEL, Calif. — Which firm will be next to white label its robo for financial advisors and their practices?
Not TD Ameritrade.
There’s not enough demand, according to Tim Hockey and Tom Nally, executives at the company.
“We haven’t seen a lot of advisor adoption of that kind of technology,” said Nally, president of the firm’s institutional arm, on a panel at the custodian’s Elite LINC conference.
Other firms would beg to disagree. Betterment and Schwab have been in the business for a few years now. Vanguard, citing requests from its 60,000 financial planners associated with its financial advisor services unit, recently announced it intends to
But TD Ameritrade isn’t convinced. Its own robo advisor, Essential Portfolios, “was built with the ability to pivot and deliver those capabilities to advisors if demand surfaced, but it really hasn’t come to fruition,” Nally said.
But other companies that have branched into this business say they are seeing results. Betterment launched its advisor solution in 2014 and now has more than 450 RIAs on the platform. Schwab, which launched Institutional Intelligent Portfolios in 2015, has more than 1,000 firms onboard as of the end of 2018. It reported $37.7 billion assets in March in both its retail and institutional segments (the firm doesn’t break down assets by segment).
TD Ameritrade CEO Tim Hockey is doubtful of robos’ ability to stand alone in the marketplace.
“We’ve long thought that a robo isn’t a business model. It’s a technology that’s just another tool that comes along and provides yet more automation versions of services,” he said on the panel. Because of saturation and price, he continued, only one or two key players will survive.
RIAs who work with Charles Schwab have long worried Schwab competes with them for business. Could Vanguard's pending purchase of Altruist put Altruist RIAs in the same position?
Jackson Fregeau is the CEO and co-founder of Quandri, the AI platform for insurance operations, serving hundreds of brokerages and agencies across North America. He co-founded the company in 2021 with his brother after seeing firsthand how the data-intensive, manual work embedded in agency operations was defining the ceiling on what the industry could deliver. Quandri pairs broker expertise with insurance-native AI speed and intelligence to create a new operating model that increases capacity, strengthens client relationships, and enables teams to operate more efficiently at scale.
Ed McFadden is the senior vice president for communications at the American Financial Services Association.
“My view is you can’t really get to scale until you’re at a $50- or $60-billion asset level,” Hockey said.
When established firms “come to the party a little later,” smaller players will struggle. “[Big firms] offer that capability and they already have distribution strength. They have the brand. They already have the client assets,” he said.
Still, some private equity investors are optimistic about the future of robo advice.
Sallie Krawcheck’s robo Ellevest raised
Big players — namely Vanguard — do dominate the robo market right now. Vanguard’s Personal Advisor Services reports a daunting
TD Ameritrade has $1.7 billion assets held in its retail robo advisor, the firm says.
