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'Robo-advisor' growth hits Wall St money managers...


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#1 Rogerdodger

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Posted 22 March 2015 - 09:19 AM

'Robo-advisor' growth hits Wall St money managers...

Doyle said the digital investment services appeal to young adults who lack the minimum -- often $100,000 to $1 million -- for traditional wealth managers, but who want advice or management of their investments.
Robo-advisor firms often allow customers to set their preferences and let the algorithm do the rest -- trading, rebalancing and minimizing taxes.
Wealthfront, the largest of the new breed, announced this month it had reach $2 billion in assets under management in just over three years.

The mainstream financial industry has taken notice.
The large investment firm Charles Schwab this month launched its "Intelligent Portfolios," using a similar method, without any fees beyond the underlying investment fund costs.
Schwab is likely to quickly overtake the "pure play" automated firms but won't put them out of business, according to Doyle.
"Schwab's entry will raise this whole market. It brings credibility to this model," Doyle said.

Doyle said these startups will lower the cost of financial advice and hurt traditional financial firms such as Morgan Stanley and Fidelity, if they fail to adapt.
Wealthfront manages the first $10,000 for free, and then charges 0.25 percent of assets.

Edited by Rogerdodger, 22 March 2015 - 09:24 AM.