Is there good reason to fear robo-advisors? While Vanguard is getting traction with their $13 billion Vanguard Personal Advisor Services, and Schwab is preparing to step up to the plate, so far most robo-advisor startups haven’t exactly made the case that they possess the knowledge or experience to make the grade when it comes to entrusting one’s nest egg to an accomplished professional.
For example, see this Investment News commentary by an employee at FutureAdvisor. “It’s come as a surprise to me that my job is as much product management as it is friendly service,” she writes. Product management? Friendly service?
Then there’s this genius, a 28-year-old Harvard Business School student who has merged the robo-advisor approach to portfolio management with the socially responsible investing trend and targets Millennials — kind of a three-fer, if you will. He may have to be patient — the average household headed by a person under 35 currently has $5,500 in assets. After a year in business, his firm has 22 clients and $36,000 in AUM. He hopes to hit the $1 million mark by the end of August. To be fair, Millennials stand to inherit more than any previous generation, and they are remarkably predisposed to save for retirement. He may just be ahead of his time.
For a mature perspective on technology, robo-advisors and the efficacy of do-it-yourself investing, see Christopher Carosa’s recent Q&A with Harold Evensky on FiduciaryNews. And Michael Kitces offers some sharp insight into the difference between robo-advisors and online financial advice in a recent ThinkAdvisor column.
