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Online Advice Service Boasts $25 Billion Focused on IRA Rollovers

One of the issues for online advice services is that their ambitions are much larger than their AUM. While NextCapital has overcome that hurdle by focusing on rollovers from 401(k) plans, it has yet to figure out a way to charge individual account holders, according to a report by RIABiz.

The company combines account aggregation, portfolio analysis and benchmarking that Russell Investment uses for its managed accounts (and Barron’s and Dow Jones make available to subscribers), which accounts for the run-up in assets.

But will the people at NextCapital’s party, attracted by the free beer, stay once NextCapital starts charging? With the looming DOL fiduciary rule and FINRA’s December reminder about suitability standards for IRA rollovers, there may be a void — which NextCapital and competitors like Wealthfront, Betterment and Personal Capital hope to fill. Something has got to give.

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