Oisin Breen

I think this is going to be the make it or break it year for both Betterment &amp; Wealthfront.  Both have taken the path of extending business lines outside of their original retail wealth management fields in the hopes of propelling (or renewing) higher growth trajectories.  We've seen a similar approach by online education lender Sofi (recently merging into one of Social Capital's newly formed SPACs).

This begs the question - why hasn't the market exploded for any of these players?  Sure $26Billion is nothing to sneeze at, but it's a long way from where most thought Betterment would be now.  I think the disappointment is based in the inability of any of these companies to get outside the standard financial service models for their specific vertical.  At the end of the day they aren't differentiated enough from the status quo to open up new markets,  re-define the user experience, or rethink the tired, old business models.  In short, their just not innovative enough to  achieve hyper-growth.  Every client won by Betterment, Wealthfront, and Sofi is "taken" from an existing competitor...at considerable expense.  Multiplying the number of channels you play in only compounds the problem.

First generation digital advisors just didn't get it done.  They better hope they get bought out before the market turns south again, because they'll be worth less than half (maybe only 25-30%) of what they're "valued" at today.

Second Betterment exec departs as new CEO Sarah Levy orients to her first month on the job and is confronted by personnel matters

Betterment

Stripped down to its essentials, financial advice is a fairly straightforward proposition. Done well, a highly ethical individual stewards the assets and actions of an investor in a personal and professional interchange.
 
But now a vibrant new class of entrepreneurs is staking their fates and their fortunes on the premise that financial advice can be delivered in a better, cheaper, easier, more ethical, more transparent manner and, as a bonus, in a way more devoid of human annoyance on both ends of the transaction.
 
Cue the robo-advisors, arguably a callous misnomer for automated asset management. 
 
The prototypical robo-advisory entrepreneur has more brands on his or her resume than NASCAR. The bona fides of these industry upstarts often include Ivy-level colleges and MBA programs at Harvard or Stanford. They are often flush with IPO dollars realized at concerns like LinkedIn, Facebook, eBay, Amazon  and Microsoft. 
 
Robo-folk believe that technology is not an enabler of advice but rather, if engineered correctly, advice itself in digital form. 
 
And, they believe the best solutions originate in Silicon Valley or academia, not Wall Street. Robo-entrepreneurs are white-boarding the whole business model, culture and technology from scratch in the conviction that little can be learned from a legacy advice system still rooted in an investment banking culture acting under the core premise that if stockbrokers get rich some of the good effects will trickle down to clients – with the clients none the wiser. 
 
Robo-advisors are a scintillating topic for students of the advice game as they grow by hundreds of millions in assets every month, constantly evolve their business models and receive cash infusions from ever-larger swaths of venture capitals.
 
Throw in the fact that robo-advisors have yet to see a dime in profits -- and won’t in the foreseeable future -- and you have real intrigue. 
 
RIABiz has avidly covered the fast-evolving robo-advice phenomenon and will continue to do so. We present the growing body of articles here.

Robo-Advisors

People Moves

<p>The RIA business has many tech vendors working hard to serve its diverse needs, and we're seeing technology become a more crucial part of setting up and running an RIA than ever before.</p>

<p>The Technology section includes unbiased tech reviews, tech-related news, and coverage of tech-related conferences.</p>

Technology

Chief operating officer Dustin Lucien is the latest to leave the New York City robo-advisor, one of at least eight positions open as it prepares a push across multiple business lines to ignite growth.

Second Betterment exec departs as new CEO Sarah Levy orients to her first month on the job and is confronted by personnel matters

Related Moves

December 8, 2020 at 5:27 PM

Brian Murphy

RIABiz Directory

White Paper Postings

Special Sections

Common Tags

Recent Articles

Popular Writers

RIABiz

Directory

Archives

Connect