Webster Bank has jumped on the robo bandwagon and launched a digital investment advice platform, thanks to its broker-dealer LPL, which provided the platform to the hundreds of banks and credit unions it serves.
The Waterbury, Connecticut-based bank wanted to ensure that it was meeting the technology expectations of clients across the wealth spectrum, from the mass-affluent to the high-net-worth, said John Olerio, director of Webster Investments.
"In every segment of our client base there is an evolving need and evolving expectations for technology advancement," he said.
The new platform, called Guided Wealth Portfolios, provides clients with automated investing and access to fully licensed financial advisors who are assigned to their online accounts.
The platform uses proprietary, automated, computer algorithms of investment advisory firm FutureAdvisor to generate investment recommendations based upon model portfolios constructed by LPL, Webster said.
In addition to access to financial advisors, the bank touted the platform's powerful technology, which it says provides customers with personalized investment strategies based on their goals, investing timeline, risk preferences and specific stage in life. It also trumpeted the platform's online portal through which clients can open new accounts, view their portfolios and make updates to their personal information.
Webster's robo platform requires a $5,000 minimum investment, an important entry-level point for new investors and a "strong play for the mass-affluent," said Olerio.
Clients are charged an annual asset-management fee of 45 basis points, "slightly lower than the range for face-to-face financial advisors" and competitive with traditional robos, according to Olerio.
Webster, of course, is not alone. It joins a slew of other banks that have unveiled robo platforms over the past year in a bid to attract and retain millennials and other tech-savvy clients interested in investing on their own. Wells Fargo and Citizens Bank, for example, launched digital advice offerings in the fall of 2017, following Capital One's rollout of its robo advisor in 2016. J.P. Morgan Chase is currently testing its digital advice program as an employee pilot and is planning to introduce it later this year, it said.
LPL made the platform available to all of its more than 700 affiliated banks and credit unions late last summer. Currently, 123 financial institutions have launched the platform, according to LPL.
Olerio gave LPL a strong endorsement, saying it provided Webster with a "tremendous platform" that took just a little over a year to implement.
"It was important as a regional bank to be able to show that we can provide the full technology offerings that are available from larger competitors," Olerio said.
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