Robo Advisors Set To Lead Wealth Management Into The Future

When it comes to the future of FinTech, robo advisors are expected to play a big part in offerings provided by both startups and established companies.

In fact, a recent Financial Planning Tech Survey found that robo advice is expected to be one of the top technologies to change wealth management over the next three years, beating out other technologies like artificial intelligence and advanced risk profiling.

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Chicago-based robo advisor firm M1 Finance announced late last month that it has reached the $1 billion assets under management mark (AUM)—noting that they reached the milestone in less time from launch and with less venture funding than other FinTech platforms, including Wealthfront, Betterment, Stash, and Acorns.

“M1 Finance’s growth, most of which is word of mouth, is evidence that there’s a huge market of people who want a next generation money management platform,” said founder and CEO Brian Barnes.

M1 isn’t the only firm experiencing solid growth. Rival Wealthfront, for example, offers financial planning, investment management and lending through its portfolio line of credit, and now manages $13.5 billion in customer assets. The company also revealed last year that its cash accounts brought in $1 billion in customer deposits just a few months after the service was launched.

Big corporations are also jumping on the robo advisor bandwagon. Late last year JPMorgan Chase gave customers with a minimum of $500 in their checking account the chance to enroll in You Invest Portfolios, a robo advisor that gives customers access to managed investment portfolios.

In addition, Goldman Sachs has plans to launch a robo advisor sometime this year, offering a solution for clients with as little as $5,000, $10,000 or $15,000 to invest. The company plans to offer it to clients of United Capital (which Goldman bought in 2018), as well as outside advisers who use United Capital’s FinLife wealth management platform. Capital One expanded its robo advisor offerings via its 2019 acquisition of United Income, which serves people transitioning into retirement. And Charles Schwab retooled its robo offering to attract younger clients, which resulted in more than $1 billion in net new assets in the first three months the service was in operation.