Lisa Shidler

Good luck, but I don't think this model works for consumers.  The old generation (John Hancock is just one of hundreds) is going to have to let go of the end client and RIA relationships altogether, as they simply can't serve the service needs of consumers.  They are all "me-too" product companies that have built little in the way of trust among consumers and are vastly outspent by the big names in the industry (Vanguard, Fidelity, Blackrock).  Bolting on a feature like NextCapital will not move the needle.

The world is moving away from these players, so they spend on technology initiatives like NextCapital on the hope that they can forego real change.  Let's face it - a lot of mutual fund providers are going to die at the hands of both ETFs and the next wave of innovative consumer services.

NextCapital does $30-million VC round with a staggering objective that's taking shape first with John Hancock

Aite Group

Financial Engines

Celent

NextCapital

Oak HC/FT

Alois Pirker

Will Trout

Rob Foregger

The days when RIAs were the outsiders at the 401(k) party are fast coming to a close. What's new is that the mass of 401(k) assets 
is getting critical at about $3 trillion; fiduciary advisors are getting appreciated; fat fees and questionable kickbacks are getting exposed and stepping out of line is getting dicier as the Department of Labor tightens the regulatory screws.

The old reasons why the 401(k) business is attractive are still in place: there are fresh assets pouring in every month and when employees leave jobs or retire, they produce rollovers that build up IRA accounts for financial advisors. The drawbacks of getting into the 401(k) business are still in place, too. Dealing with retirement assets is really a second line of business and it remains -- unless you overcharge with hidden fees -- a low margin business with high potential fiduciary liabilities.

Still, the outsourcers, infrastructure and accumulated knowledge for RIAs to capitalize on is growing daily and a the mega-shift of assets away from brokers is making the 401(k) business riskier and riskier -- to ignore.

401(k) Stories

Stripped down to its essentials, financial advice is a fairly straightforward proposition. Done well, a highly ethical individual stewards the assets and actions of an investor in a personal and professional interchange.
 
But now a vibrant new class of entrepreneurs is staking their fates and their fortunes on the premise that financial advice can be delivered in a better, cheaper, easier, more ethical, more transparent manner and, as a bonus, in a way more devoid of human annoyance on both ends of the transaction.
 
Cue the robo-advisors, arguably a callous misnomer for automated asset management. 
 
The prototypical robo-advisory entrepreneur has more brands on his or her resume than NASCAR. The bona fides of these industry upstarts often include Ivy-level colleges and MBA programs at Harvard or Stanford. They are often flush with IPO dollars realized at concerns like LinkedIn, Facebook, eBay, Amazon  and Microsoft. 
 
Robo-folk believe that technology is not an enabler of advice but rather, if engineered correctly, advice itself in digital form. 
 
And, they believe the best solutions originate in Silicon Valley or academia, not Wall Street. Robo-entrepreneurs are white-boarding the whole business model, culture and technology from scratch in the conviction that little can be learned from a legacy advice system still rooted in an investment banking culture acting under the core premise that if stockbrokers get rich some of the good effects will trickle down to clients – with the clients none the wiser. 
 
Robo-advisors are a scintillating topic for students of the advice game as they grow by hundreds of millions in assets every month, constantly evolve their business models and receive cash infusions from ever-larger swaths of venture capitals.
 
Throw in the fact that robo-advisors have yet to see a dime in profits -- and won’t in the foreseeable future -- and you have real intrigue. 
 
RIABiz has avidly covered the fast-evolving robo-advice phenomenon and will continue to do so. We present the growing body of articles here.

Robo-Advisors

The RIA business has many tech vendors working hard to serve its diverse needs, and we're seeing technology become a more crucial part of setting up and running an RIA than ever before.

The Technology section includes unbiased tech reviews, tech-related news, and coverage of tech-related conferences.

Technology

Nearing 100 employees, the Chicago-based robo-advisor blurs 401(k) and retail asset distinctions by making advice factories out of investment product manufacturers

NextCapital does $30-million VC round with a staggering objective that's taking shape first with John Hancock

Brian Murphy

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NextCapital does $30-million VC round with a staggering objective that's taking shape first with John Hancock

Brian Murphy

Related Moves

January 21, 2023 at 5:03 AM

December 20, 2021 at 11:59 PM

September 22, 2020 at 8:59 PM

July 16, 2022 at 1:35 AM

RIABiz Directory

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