01 Jan FinTech Trends: Wealth Management and The Rise of Robo Advisors
There’s an age old question in wealth management and investment advice: Man or Machine. Today the battle has begun.
Over the last six years, a related segment of FinTech that has received a lot of attention, and a fair share of controversy, is automated investment services… or what are frequently called “robo advisors.”
These technology-backed advisors were built on the premise that many of the activities performed by a Registered Investment Advisor (RIA) can be replicated by advanced intuitive software. They promise lower costs, simplicity and even the bonus potential of making investing “fun”.
Already, robo-advisors like Betterment and Wealthfront have accomplished something that 99% of startups never do – turning an idea into a company that is growing, thriving, and has the chance to be a permanent fixture in its industry.
In fact, the $4.7 trillion wealth management giant BlackRock just acquired FutureAdvisor, another robo advisor platform with $600 million under management.
But the process of creative destruction in the FinTech industry is happening so swiftly, I began questioning whether relatively new success stories like these can already be jeopardized by competitive threats. Looking at the companies that bookend them – the old-guard companies on one side, and the brand-new crop of startups and products on the other — I came away with a healthy dose of skepticism on the future of the stand-alone robo-advisor.