Robo-advisory services – from the likes of Vanguard and Charles Schwab to pure players Betterment and Wealthfront – suffered from outages Monday amid a sharp sell-off in stocks, with customers complaining about spotty access and being shut out of their trading platforms altogether. According to media reports, with the Dow Jones Industrial Average plummeting by more than 1,000 points, investors rushed to check on their investment accounts, with some finding that they couldn't do so on a temporary basis.
T. Rowe Price confirmed the outages on its website Monday, while a TD Ameritrade Holding Corporation (AMTD) spokesperson told CNBC that one of its mobile apps that enables account access and trading was "slow" for some time during afternoon trading but that it has since been fixed. Customers of Vanguard and The Charles Schwab Corporation (SCHW) also reported problems logging into their accounts. A spokeswoman for Vanguard told the The Wall Street Journal that some clients were experiencing "sporadic difficulty" accessing accounts on Vanguard.com or via phone on Monday but that full access has been restored. A Schwab spokeswoman told the paper that a trading application was suffering from delayed logins and that traders were alerted and moved to Schwab.com, which did not have any outages. The issue was resolved within minutes, the Schwab spokeswoman told The Wall Street Journal.
[Ally Invest offers powerful charting tools and $4.95 trades. Read Investopedia's Ally Invest review to learn more about this low-cost broker.]
In the case of Betterment and Wealthfront, the outages mark the first time these robo-advisors have had to deal with a huge sell-off in the markets. After all, many of these pure play robo-advisors entered the market in the past few years as stocks have been marching higher. Up until January, stocks have increased for 15 months in a row.
At Betterment, customers could not log into their accounts on Monday afternoon. Betterment manages more than $10 billion in assets. A spokesman told Business Insider that the crash was due to "particularly high volume" as the markets plummeted. Betterment customers were shut out of their accounts for 30 minutes, noted Business Insider. "Accounts were secure throughout and portfolio management activities like rebalancing and tax loss harvesting continued," the spokesman told the publication. A Wealthfront spokeswoman told Business Insider that customers could not access their accounts for a short period of time but that the issue has been resolved. Meanwhile, Acorns took the step of posting a message when users sign into their accounts warning about volatility but advising that they should stay the course.
How the pure robo-advisors fare if the Dow Jones Industrial Average continues to plummet will be a test for this crop of investment platforms that rely on algorithms and computer models rather than humans to provide investment advice. During a correction, the argument goes that investors want more hold-handing, which they won't receive from a robo-advisor. Without some advice, these investors could pull out of the markets. The glitches on Monday could also hurt the robo-advisors' reputations with customers who have become more comfortable being DIY investors. After all, investors don't want to be blocked from their accounts on days when the stock market is flying high or – in the case of the past week – plummeting.