Ally Invest Set to Go After Millennials Following TradeKing Acquisition

Ally Financial Inc. (ALLY) paid $275 million last April to acquire TradeKing, betting that it can make a splash in self-directed online trading, particularly with millennials. And while the robo-advisory market is becoming crowded, Alley Invest thinks that – with its acquisition completed and TradeKing integrated into the business, along with its parent's online banking capabilities – it will resonate with younger investors who haven't signed up with a robo-advisor just yet.

"We've spent pretty much the last 12 months integrating TradeKing into Ally and rebranding TradeKing," said Rich Hagen, the former president of TradeKing who now heads up Ally Invest, in an interview earlier this fall. "If you happen to have a bank account with Ally, we'll show you side-by-side your bank account alongside your investment account and you can drill down or you can move money between the two. We've done a nice job at kind of integrating the client experience from an entity perspective."

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To say that the robo-advisor market is getting crowded is an understatement. In addition to the discount brokers including Charles Schwab, E*Trade and TD Ameritrade, traditional financial firms such as Bank of America Merrill Lynch and Wells Fargo have entered the space. They are all courting millennials, who are becoming the next millionaires as Baby Boomers age. These younger workers are also saving more and are preparing for retirement even if it's decades away.

According to a recent LendEDU survey of 502 millennials who are saving for retirement on an ongoing basis, 53.59% said they aren't using a financial advisor to help them invest. That compares with 46.41% that are working with a financial advisor. While only 24.30% of survey respondents said that they are using robo-advisors, it's not for a lack of willingness. A majority – 61.58% – said they haven't used one because they didn't know that this type of investing advice existed.

That presents an opportunity, particularly for those that are embracing the things millennials want such as technology, which is a strong suit of Ally. For example, Ally Bank announced this week that it created an Amazon Alexa skill for its mobile banking clients. With it, customers can check their bank accounts via voice. While Alley Invest has not yet announced anything on that front, it is not a stretch to assume that the Alexa skill will make its way to Ally's online investing platform as well.

"What's interesting is on the banking side, 55% of new customers are millennials. Our Ally Invest portfolio is over 25% millennial," Hagen said in that fall interview. "When you think about things like speed and efficiency, a simple and easy to use and understandable platform, and value, these are all things that have become high priorities to that new millennial consumer."