2023 Robo Advisor Latest News – The Robo Advisor Landscape is Blowing Up!
It seems like every time I open my inbox another message appears from a robo-advisor with new changes and updates. These changes reflect the competitive nature of the business. And that’s great for consumers. First there was the race to the bottom with fee-free robo advisors like SoFi Automated investing and M1 Finance. Then we had the addition of financial advisors to the all digital robo-advisor on many platforms. And this hybrid model continues to gain traction as more automated investment advisors add financial planners.
Now, many platforms are jumping on the crypto platform including M1 Finance, Wealthfront and Betterment. Branching out from the algorithm driven model of investing and adding stocks and etfs for additional customization is another trend.
The bottom line is that consumers benefit, with more investment choices added to the digital investment management solutions.
Following is a list of some of the latest robo-advisory news.
Blooom Closes it’s Doors to Retail Investors
“Blooom shutters its robo 401(k) RIA out of the blue,” by, Oisin Breen at RIABiz.com
“Blooom, a $5.6 billion AUM asset manager, just self-terminated and left only a cryptic explanatory note in which it sounds oddly pleased about the outcome.
The Overland Park, Kan. firm abruptly informed nearly 29,000 clients, Nov. 17, 2022 that it will no longer be their asset manager or even make their accounts available on the Blooom website….”
Bloom was the only robo-advisor that actually managed 401k allocations. You provided them with your log in credentials and the firm would create what they believed was the best asset mix given your preferences and the available assets at your company. We don’t know why they are closing their retail business, but the website simply stated, “Today we are embarking on a new chapter at blooom – one that we believe will ultimately result in an enhanced offering in the retirement marketplace but unfortunately, this requires us to shut down the current blooom service effective immediately..”
No client funds are impacted and the main impact is that prior users now need to manage their accounts on their own.
M1 Finance adds Crypto
M1 Finance recently added 10 digital coins and six cryptocurrency ETFs. To add the crypto digital coins you’ll need to open a separate account and pay a distinct fee to trade.
M1 Crypto assets are stored with Apex Crypto. Apex Crypto is a popular storage facility for digital currency and has affiliations with institutional custodians and access to secure omnibus custdial wallets. These crypto assets are typically stored in cold storage solutions.
The fee for trading Apex Crypto is 1% on both buys or sells, and is assessed by APEX. The markup is reflected in the price. M1 and Apex Crypto have entered into a fee rebate agreement.
M1 Crypto is added to the individual stock and ETF trading, 60+ customized portfolios, high yield cash account and lending.
Wealthfront adds Individual Stock Trading
Wealthfront just added individual stock investing. The stock trading account offers a $1 minimum, fractional shares, zero commissions and more specialty features. Wealthfront continues to add features to the original digital robo advisor. The individual stock trading rounds out the managed investment service, crypto, ETFs, borrowing and a high yield cash account
The Wealthfront investing account is fee-free. That means no commissions and no management fees.
Wealthfront’s guiding principals are:
“1. Enable you to make more informed and intelligent decisions when investing in stocks
2. Make it easy to discover, evaluate, and diversify into stocks you may have not considered
3. Make it effortless to invest in multiple stocks at once”
Wealthfront offers themed lists of stocks to aid in your stock discovery. Check out the new offer, the stock trading app just might make you a better all around investor.
Read the Wealthfront Review
Vanguard Digital Advisor adds Actively Managed Funds
Vanguard’s Digital Advisor, one of the the largest robo-advisors, as measured by assets under management, just broadened it’s offerings. Formerly, the Vanguard all-digital robo advisor was a basic four fund offer with access to U.S. and international stock and bond ETFs. The low 0.15% management fee was near the bottom of the pack.
Still a low-cost leader with a new price structure of 0.20% AUM maximum, Vanguard recently launched the actively managed funds along with the passive offers for the digital robo advisory customers. This is a huge change, as there’s only a handful of robo-advisors for active investors.
As of April, 2023, Vanguard has a free management promotion.
Read the Vanguard Robo Advisor Review
Robinhood adds IRA Matching Contribution
Typically the purview of employment retirement plans like 401(k) or 403(b) accounts, the Robinhood App now offers IRA account holders a 1% contribution match. Although not the 5 to 6% employer match offered by many employers, this is a game changer for a financial app. Limitations apply and you must commit to leaving the money in the account for at least five years.
Robinhood began as a stock and ETF trading app, with a mission to democratize investing. Like many competitors, over time the Robinhood app has broadened it’s offers with high yield cash, crypto, margin and managed portfolios.
If you open an IRA retirement account at Robinhood, and make contributions from an external bank account, you can pick your own investments and receive the 1% match. (Review the limitations listed on the website.) If you prefer, you can answer a few questions and elect a managed portfolio, similar to a typical robo-advisor portfolio.
If you’ve waited to open a retirement account, this might be an incentive to start diverting more of today’s earnings for tomorrows retirement.
Betterment Revises Pricing Model
Betterment recently replaced it’s 0.25% AUM fee for all account holders with a new model for those with less than $25,000. Betterment’s new pricing model enables the company to improve revenue on it’s smaller accounts.
Betterment pricing details:
Betterment Digital
- $4.00 per month for accounts worth less than $20,000.
- 25% for accounts worth more than $20,000 or those with a $250 per month auto deposit.
Betterment cash accounts are fee free, while Betterment Premium with access to financial advisors charges 0.40% AUM and requires a $100,000.
The new Betterment pricing structure, shows the profitability challenge that small accounts present for financial firms.
Xantos Labs Launches with Actively Managed Investment App
“Our mission is to deliver consistent above-average returns through a disciplined process focused on actively managing downside risk. We employ fundamental analysis for security selection and a systematic approach to portfolio construction.” Xantos website.
Xantos is a global investment platform, designed for smaller investors. Their goal is to use active management to beat the typical index fund market returns.
Xantos is a statistically driven, evidence-based investment firm with a disciplined foundation built on research.
The Xantos investment strategy initially employs fundamental analysis to pick stocks with long-term growth prospects. Next, Xantos Labs overlays a quantitative approach to systemize the stock selection process. The account minimum is $500 and the fee structure is 2.0% AUM or $5 per month, whichever is greater. For more details, check out the Xantos factsheet.
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