Robo "Strategery"

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    Profile photo of Sameer Jain
    Sameer Jain

    Robo advisors are now part of the growing cluttered category of digital investment managers. Thanks to the rise of low-cost indexed ETFs, digital investment managers have the building blocks they need to assemble low-fee, diversified, and automated portfolios. Software startups for robo advice have been formed over the past three years and many have accepted tens of millions of dollars in venture capital funding to challenge the traditional financial advisor model. Their proposition is that by leveraging technology they can deliver financial advice to millions of people (the mass affluent segment) at lower prices and lower account minimums than incumbent firms. These seem to now stray into traditional software space too. I have seen multiple financial software firms providing archaic asset allocation systems for traditional investing ( though none for blending alternative investments with traditional).

    Extending simplistic allocation and portfolio construction views have led to a proliferation of software vendors creating commoditized tools and this genre of undifferentiated robo advisors who decry benefits of active management. I find that most existing tools, often use arbitrary ‘rules of thumb’ which lack any scientific precision or rigor, create false precision and indeed harm investor portfolios.

    Also looks like no B2C robo advisor, despite the large amounts of venture funding some have raised, can succeed without adequate capitalization. Because most of the AUM capital raised by robo advisors has been from retail investors where average subscription amounts are approximately $25,000, it takes considerable expense, time and effort to cultivate a brand, to advertise and expand footprint. Not sure where this will all go.

    Profile photo of Francois Gadenne
    Francois Gadenne

    How are Robos affected by the question “What is complete retirement advice?” in the context of the Fiduciary Rule and the definition of what is in the Best Interest of the client?

    Does this issue of completeness for retirement advice affect advisors differently from robos?

    All good questions that we will discuss during the Summer Conference.

    Profile photo of fg

    So, if retail-facing robos are peaking, what can you do with the technology platforms?

    We re commend you check out the following that RIIA and its partner PwC have been working on:

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