Automating Wealth Management

Warren Buffet recently spoke publicly that he and his team are finding it very challenging to beat the S&P 500 index. His popular refrain of “Betting On America” seems to be a good way for us common folk to think about how we should invest as well.

With all the financial products available including ETFs which mimic the S&P 500 or the automated robo advisors is there any need for a wealth manager these days? One may argue that wealth managers are for a specific type of client that has more complex asset holdings. But if Warren Buffet can’t seem to beat the broader index through his set of complex asset holdings, should any of us even by trying?

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Personal Capital is an online financial advisor and personal wealth management company that was founded in 2009. The Company has grown quickly and currently has assets under management of over $8.5 billion. It provides both free and paid wealth management products. Personal Capital’s primary value proposition to individual investors is automated retirement planning, college savings, and overall peace of mind by having a continuous real time picture of personal savings and investments.

They are not the only players in the space, however. Companies such as Betterment, Wealthfront and FutureAdvisor provide very similar offerings. Also, some of the traditional retirement and savings behemoth’s like Vanguard have gotten into the game.

Even more readily accessible to any investor is SPY, the S&P500 ETF issued by State Street SPDR. Its yield is currently 10% and has total assets under management of $255 billion with an extremely low expense ratio of 0.09%. The ETF’s largest holdings include Microsoft, Apple, Amazon, Facebook, Berkshire Hathaway, JNJ, Alphabet and JP Morgan among may other well know large U.S. corporations.