RoboAdvisor is Unstoppable?

The Financial news focus in January was animated, colorful, and with 10 articles on Robo-Advisory.

As markets are in turmoil and portfolios are bleeding, most are questioning the impact of the macro-economic cycle.  In a nutshell, incumbents and insurgents in financial services aren’t over-leveraged, so no blowup expected there. Early stage startups can recover quickly from market shake-ups. Valuations of late stage Fintechs can get hammered and take more time to recover.

January has not been boring on any front. Robo-advisory continues to be a hot topic and yellow (the color of new ideas) was a trending  topic (Roboadvisor hashtag on Twitter can brighten-lighten your day).

2014 was the peak year of VC funding in the robo-advisor sector

2015 was the year of incumbents starting to overcome the Innovator’s dilemma in investing

2015-2016 will be the years of acquisitions & incumbents putting up signs “Robo-advisor Coming soon”

M&A

Two brokers, an insurance company, and two incumbents in the investment and asset management business; were the 2015 movers. They acquired robo-advisory businesses and are integrating them in different ways into their businesses.

Interactive Brokers acquired Covestor keeping it as a separate entity and using it to enrich it’s tools available to advisors on their Investors Marketplace.

IG acquired InvestYourWay to enhance its distribution of Blackrock ETFs.

Blackrock acquired Future advisor for its corporate clients and has already onboarded BBVA Compass.

Invesco acquired Jempstep, to make it available to its advisor network.

Northwestern Mutual acquired Learnvest to complement its financial planning and insurance business.

Built in-house

Vanguard and Charles Schwab have been the front-runners in taking a stance with regards to the Innovator’s dilemma (aka adding to their business a lower cost offering that can be cannibalizing their business model). Fidelity had also been amongst the first with their partnership with Betterment that proved short lived.

Fidelity is now in the process of launching their own robo, FideltyGo and an additional institutional version.

Deutsche bank is  Anlagefinder.

Bank of Montreal (BMO) is the first Canadian to step in with Smartfolio; followed by the National Bank of Canada with InvestCube.

Saxo Bank has launched Saxo Select in partnership with Blackrock funds.

Macquarie in Australia, launched a DIY robo service, OwnersAdvisory.

Bank of America is designing their robo for Merill Edge.

UBS says Robo is “unstoppable” and the giant universal bank will test it in one market this year.

Have we reached a dozen and are these “Launching” & “Coming soon” signs from large institutions? Is this a global trend? Yes, Yes.

US dominated for now (take a look at the list sorted by region), but Canada and Europe is joining. Asia too.

Vanguard; Charles Schwab

Fidelity

Bofa (in design)

Deutsche bank; Saxo Bank

UBS (testing)

One UK bank from the big 4 (in design according to FT)

BMO, National Bank of Canada

Macquarie, National Australia Bank; Mizuho bank Japan

True that robo-advisor VC funding dropped in 2015 but incumbents rolled up their sleeves and invested in their own robo-advisors. And yes, Fintech wasn’t trending in their earning calls this year but this I see as a just a “tagging” glitch. 2016 is trending in #roboadvisor and it is unstoppable.

source: dailyfintech

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