KEY TAKEAWAYS
  • The rise of independent robo-advisors that rely on a a combination of passive investment strategies, algorithmic risk assessment and low fees has shaken up the wealth management business.
  • The large incumbents in the space have taken note and responded by launching Robo-advisory services of their own on an even larger scale.
  • The question is whether independent robo-advisors can continue to survive by diversifying their offerings or are they inevitable acquisition targets for the larger incumbents in the space?

Perhaps the biggest challenge to the investment case remains the low margins offered by these business models, possibly suggesting that a combined asset-management-advisors play like Vanguard might make the most sense given that Vanguard collects not only the slim advisor fee but also their own asset management fees . That said, the minimums required by Vanguard leave the space open for firms like Betterment and Wealthfront, which have picked up $13.5 billion and $10.2 billion in assets-under-management compared to Vanguard’s $101 billion.

Click here to explore the companies and opportunities featured in this article