Brooke Southall

Ask WorkDay about B to C vs B to B. WorkDay has done very well and they go out of their way on their roadshows to talk about how they took cues from Google and Amazon, not SAP. They know something about this, their engineers built PeopleSoft for B to B in the 1990s.

If Blackrock has a problem its because its systems were built during a different era.

Brooke, Google “Betterment 13F” and you’ll get the answers you wanted on the ETFs they use.

Why BlackRock's purchase of FutureAdvisor for $152 million could be a deal of destiny

Bo Lu is said to have parlayed an introduction to Larry Fink into a lucrative liquidity event.

BlackRock

Future Advisor

Celent

Vanare

Nest Egg

Sequoia Capital

Steve Winks

Will Trout

Bo Lu

Larry Fink

Lex Sokolin

Alfred Lin

A look at the numbers shows that exchange traded funds are starting to move in lockstep with RIAs and vice-versa. RIAs invested $496 billion in ETFs in the 12-month period ended June 30, 2015 – that’s a $78 billion increase compared to the same period the year before. By comparison, the wirehouse channel added 20% fewer ETF assets, or $397 billion in the last year; granted, an amount that was $70 billion greater than its aggregate investment during the same 12-month period the year before, according to Broadridge Financial Solutions. RIAs that manage portfolios and make discretionary investment choices for their clients value ETFs because they provide advisors with easy access to market segments at a cheap price – an especially important factor for RIAs who are compensated on an asset-fee basis. Fee-based advisors appreciate ETFs’ tax efficiency, liquidity and broad exposure at low cost. Conversely, RIAs are a prized channel for ETF-makers like State Street, Invesco, PowerShares, Vanguard Group and BlackRock. ETFs are also a major ingredient in portfolios devised by robo-advisors -- essentially automated RIAs -- for the mass affluent who invest more than 90% of their assets using ETFs.

ETFs

Stripped down to its essentials, financial advice is a fairly straightforward proposition. Done well, a highly ethical individual stewards the assets and actions of an investor in a personal and professional interchange.
 
But now a vibrant new class of entrepreneurs is staking their fates and their fortunes on the premise that financial advice can be delivered in a better, cheaper, easier, more ethical, more transparent manner and, as a bonus, in a way more devoid of human annoyance on both ends of the transaction.
 
Cue the robo-advisors, arguably a callous misnomer for automated asset management. 
 
The prototypical robo-advisory entrepreneur has more brands on his or her resume than NASCAR. The bona fides of these industry upstarts often include Ivy-level colleges and MBA programs at Harvard or Stanford. They are often flush with IPO dollars realized at concerns like LinkedIn, Facebook, eBay, Amazon  and Microsoft. 
 
Robo-folk believe that technology is not an enabler of advice but rather, if engineered correctly, advice itself in digital form. 
 
And, they believe the best solutions originate in Silicon Valley or academia, not Wall Street. Robo-entrepreneurs are white-boarding the whole business model, culture and technology from scratch in the conviction that little can be learned from a legacy advice system still rooted in an investment banking culture acting under the core premise that if stockbrokers get rich some of the good effects will trickle down to clients – with the clients none the wiser. 
 
Robo-advisors are a scintillating topic for students of the advice game as they grow by hundreds of millions in assets every month, constantly evolve their business models and receive cash infusions from ever-larger swaths of venture capitals.
 
Throw in the fact that robo-advisors have yet to see a dime in profits -- and won’t in the foreseeable future -- and you have real intrigue. 
 
RIABiz has avidly covered the fast-evolving robo-advice phenomenon and will continue to do so. We present the growing body of articles here.

Robo-Advisors

FutureAdvisor will nestle into BlackRock's risk management unit armed with iShares while Wealthfront and Schwab favor Vanguard ETFs 

Why BlackRock's purchase of FutureAdvisor for $152 million could be a deal of destiny

C G

Bill Winterberg

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Why BlackRock's purchase of FutureAdvisor for $152 million could be a deal of destiny

C G

Bill Winterberg

Related Moves

March 25, 2023 at 1:32 AM

June 7, 2024 at 1:44 AM

July 26, 2023 at 2:34 AM

January 13, 2023 at 3:01 AM

RIABiz Directory

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