The robo-advisory field continues to expand with a projected launch by Wells Fargo later this year. The robo-advisor field is still maturing in contrast with its older, established wealth management siblings. But the old investment management approaches are being replaced by newer automated systems. From the standalones like Wealthfront and Betterment to the models that are integrated within an investment company, such as Vanguard Personal Advisor Services, robo-advisors are expanding. Additionally, many RIAs and financial advisors are using white label automated advisors in their practices. (For more, see 9 Top Robo-Advisors for Financial Advisors.)

Wells Fargo Robo

According to recent reports, Wells Fargo expects to launch its robo-advisor service June 2017. Called Intuitive Investor, the new platform will be accessible to all Wells Fargo brokers and clients. Wells Fargo expects to capitalize on its rich bank resources, intellectual capital and investment unit. Investing through the robo-advisor will require a $10,000 minimum investment (which is higher than several competitors) and will cost 50 basis points. But this fee will also encompass the access to financial advisors over the phone that Wells Fargo plans to include with the robo service.

Currently, Wells Fargo has more than 15,000 advisors with $1.4 trillion in client assets, as stated in its recent earnings report. The Wells Fargo community banking unit believes that their clients are ready for this type of investment choice.

The Puzzle Pieces of the Robo-Advisors

This kind of investing platform is becoming increasingly profitable for the big players in wealth management. According to Financial PlanningCharles Schwab’s robo recently claimed over $8 billion in assets under management (AUM). Betterment is doing quite well too, recently announcing that it had over $5 billion in AUM. The perceived profitability is encouraging many asset managers and banks to join the robo-advisor ranks. (For related reading, see: Betterment vs. Financial Advisor: Which Is Best?)

That same Financial Planning article claims that only 5% of investors have used an automated advisor, which suggests there’s room for the automated investment technology to expand. In fact, many investors are completely unfamiliar with the robo-advisory model. The research statistics underscore the consumer growth possibilities in the robo-advisor models. (For related reading, see: Robo-Advisors That Aim to Serve Women.)

Costs are increasingly important to consumers and advisors. The various models all apply distinct cost structures. For example, custodian Schwab charges 10 basis points for advisors with less than $100 million in AUM and offers their robo for free to advisors with greater client assets. Not only will competition expand by services and provides, but the cost structure will impact the robo-advisor expansion as well. 

The Bottom Line

Wells Fargo and Schwab's approaches to robo-advisors underscore an industry bursting with possibilities. There are tremendous opportunities for the consumer and the financial advisor to utilize the robo-advisor platforms. Regardless of where a consumer's assets are held, there is likely to be a robo-advisor available to automate the investor portfolio. For the advisor, either independent or working with a firm, there are many robo-advisory solutions as well. (For related reading, see: What Financial Advisors Can Learn from Robo-Advisors.)

 

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.