Sat, Feb 29, 2020
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
New Managers April 2018

MARKETING CHALLENGE: Diane Harrison: Don't Fear The Robo!

 

DON'T FEAR THE ROBO!

Technology advances have infiltrated every corner of finance, including the world of wealth management. While few can argue with the positives of automated, algorithm-based portfolio management platforms, the advent of the cost-efficient, dispassionate robo-advisor has struck fear into the heart of many a financial advisor and fund manager, who see these technology options as a threat to their business practice

Full-service wealth management has survived the birth of discount brokerages and the online trading boom. It will survive the latest influx of robots, whose advantages will eventually mimic each other to the point of being indistinguishable. One thing about robot advisory platforms is that they're entirely passive from the end user's point of view. They ride the market. They don't outperform. They aren't emotional. However, they don't call the client. They can't respond to specific questions. They can't form any sort of relationship with a client and be a resource to them for a range of life-planning needs beyond investment performance. They will never replace full service wealth management, though they can be a resource within this business.

FIRST, WHAT ARE SOME BENEFITS OF A ROBO?

Lower fees. Most of these robo advisors charge less than 1%, with some south of .20%, versus the standard investment advisor fee range of 1-3% on a client's portfolio. This difference alone can make for a slight outperformance over traditional investment services for many individuals.

Lower cost of entry . In addition to being economical from a management fee perspective, oftentimes the robo platform will allow for client portfolios to be as small as several thousands of dollars, versus a tenfold or higher threshold for traditional portfolio management accounts.

Elimination of emotional trading. With a robo advisor executing a passively managed program, there is no c......................

To view our full article please login

This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.
New Managers
New Managers
New Managers

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Legal: Philip Falcone sued over alleged $65.8m default, Warhol painting[more]

    From Bloomberg: Former Harbinger Capital hedge fund manager Philip Falcone was accused in a New York lawsuit of defaulting on $65.8 million in loans and violating the terms of lending agreements by selling two paintings used as collateral, including one by Andy Warhol. Melody Business Finance LL

  2. U.S.: Second round of layoffs to hit TIAA's shuttered OCIO business this week, Capital buffers edged lower at systemic US banks in 2019[more]

    Second round of layoffs to hit TIAA's shuttered OCIO business this week From Institutional Investor: A second round of layoffs in TIAA's outsourced chief investment officer business is slated to take place this week, according to one former staffer. TIAA announced in November that it wa

  3. US-based micro venture capital funds raise a record amount of capital in 2019[more]

    Laxman Pai, Opalesque Asia: US-based micro venture capital funds (sized at $100mn or less) had another record-breaking year in 2019, said a report. Managers of micro funds surpassed the $8.3bn raised in 2018 with $8.4bn secured through 282 fund closures, according to the report by Preqin and t

  4. Tech: Privacy study: Brave browser smacks down Chrome, Firefox & Safari, How AI can bring new insight to private equity deals[more]

    Privacy study: Brave browser smacks down Chrome, Firefox & Safari From Coin Telegraph: A privacy expert who compared some of the most popular browsers on the market reached an unambiguous conclusion: Brave trumps competition. Trinity College Dublin's chair of computer systems, Dr. D

  5. Investing: How hedge funds were positioned for the market selloff, Hedge fund billionaire Jim Simons is betting millions, Billionaire Ken Griffin pulls the trigger on 3 "strong buy" stocks, Ackman still likes Chipotle, says sold shares to manage portfolio, EQT Corp sells half its stake in pipeline operator, strikes rate relief deal[more]

    How hedge funds were positioned for the market selloff From Institutional Investor: A look at the market exposure levels of funds including Tiger Global, Greenlight, Third Point and Horseman. Were hedge funds prepared for the stock market's sharp selloff? While their results won't