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Other articles on ‘wealth disruption’

In response to the two articles in Cuffelinks (Part 1 here and Part 2 here) on disruption in wealth management, readers provided some follow up articles on related subjects.

Why Paying for Financial Advice Makes Sense, New York Times, 3 April 2015

This article tells the story of LearnVest, a company established in the US in 2009 to bring financial planning to the masses. After spending US$75 million of venture capital money, it has less than 10,000 clients in its standard plan at $299 upfront and $19 a month. Sobering numbers for any fintech looking to engage with a large, untapped market. LearnVest has effectively capitulated by selling to a large insurance company, Northwestern Mutual.

Investing’s Old Guard Gets Its Algorithm On, Bloomberg Business, 20 March 2015

This article quotes an investor from Houston who pulled all his money out of the market in 2008 only to miss the gains as the market recovered to 2013. “I just need protection from myself” he says as a reason to let others make investment decisions for him. He did not like the high fees of traditional advisers, so turned to roboadvice. It then outlines the move by the US$3 trillion ‘behemoth’ Vanguard and the US$2.5 trillion Charles Schwab into this space.

Digging into Digital Advice White Paper, Fidelity Investments, 28 November 2014

This US White Paper focusses in particular on the propensity of Gen-X and Gen-Y to work with a ‘digital adviser’, and among affluent members of these groups, 29% are already familiar with digital advisers, and 7% use one. The potential benefits are lower fees for advice, ease of doing business, low asset requirements and online access to do-it-yourself tools. 46% of those surveyed believe professional financial advice is too expensive, and so digital is probably tapping into an audience that would not otherwise see an adviser.

The Paper also includes details on pricing levels (as low as 15bp), size of 15 largest online advisers ($4.3 billion in September 2014) and total number of providers (estimated at about 50). But it’s not only for new players. Fidelity offers views on how existing planners can evolve their practice. One message: “Be online, or risk being irrelevant.”

Robo-Advisor White Paper, Equity Institutional, 2014

This paper provides financial advisers with six ways to benefit from “the coming boom in robo-advice assets”. It distinguishes three categories of clients: delegators (“Do what you think is best with my money”), validators (who participate in decision-making) and self-directeds (who want to do it themselves). The writers say 72% of investors want some level of financial advice with their investment decisions. They reassure traditional advisers by arguing that the roboadvice experience is like a calculator with better graphics, often cold and generic and lacking the human element that is essential to good advice. It also has an impressive list of further reading.


Graham Hand is Editor of Cuffelinks. This article does not address the personal needs of any individual, nor is it responsible for the accuracy of the content in any referenced material.


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