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Online Advice Providers Rake in Another $60 Million in Funding

Two of the more well-known online financial advice providers raised a total of $60 million recently, increasing the stakes and discussions about the viability of online advice firms.

Betterment raised $32 million from current investors and new investors CitiVentures and Northwestern Mutual Capital, a wholly owned subsidiary of NWM Life. In all, Betterment has raised $45 million since it launched in 2010.

Learnvest, started in 2009, raised $28 million from previous VC investors and — guess who — Northwestern Mutual Capital. That brings their total to $72 million.

The capital raising caused a firestorm on Twitter, Investment News reports.

One obvious question is whether these so-called “robo-advisors” are a threat or an opportunity for FAs. Is Northwestern Mutual hedging their bets, or do they think that online advisors could complement their army of financial planners?

As we noted earlier this year, many Millennials who are getting rich do not want to talk or listen, relying more on texting and tweeting. This might make the online platforms more attractive if they can find a middle ground between access to people on the phone or in person and very impersonal online calculators. Many online firms have rich IP resources and are adept at blogging and social media — both of which are foreign to most advisory firms. Just as the 1990s heralded discount brokerages, a dramatic sea change could be coming, as many of the online firms looking to white-label their services may offer interesting partnerships for advisors.

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