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I think there are legitimate hurdles robo-advisors need to climb to convince potential clients to join. Investing is something that should be done with a fairly

I think there are legitimate hurdles robo-advisors need to climb to convince potential clients to join. Investing is something that should be done with a fairly long time-frame (10+ years). Of the companies listed here, how many do you think will exist in 10 years? The concern isn't that your money will disappear once the company folds (though maybe this is a fear some have), but rather that it will create a large burden once it happens, and possibly have tax implications? I doubt we will see many of these companies convince older folks to trust them with their money, at least not for a little while. I say this with the experience of having some money in WiseBanyan, which appears to be superior on cost to most of the others out there, except that it looks like it's losing the publicity/marketing/AUM race, so my fear is that it will fold. It's keeping me from putting more money there.

jsprogrammer 11y ago
I think that the whole space may suffer from the, "If they are so good at making money from money, why do they need to solicit my money? Why don't they take their own money and use their own strategies to make their own profits?" problem. Maybe I am wrong. Is there a 0-cost Robo Advisor (that actually produces real returns) in existence?
- AjithAntony 11y ago
  > If they are so good at making money from money, why do they need to solicit my money? You mean the VC's? Because the strategies of these conservative robo advisors is far from the kind of expected return that a VC wants. You mean the customers? Why pay anybody to manage a stock portfolio? Each one has a slightly different value proposition, but in the end, it is just easier. It is valuable to some people. Just like paying anybody else for a service. > Is there a 0-cost Robo Advisor Wisebanyan is going with a "free" service and upselling extras. I don't forsee it going well unless their costs are actually low. I do have an account with them and 4 other robos. > (that actually produces real returns) in existence? You mean for the VCs? dunno. For customers? Of course. Most are just index funds. If the market is up then they all had real returns. Did you mean real returns in excess of some alternative? Depends on the alternative.
  - jsprogrammer 11y ago
    If a Robo Advisor is just a front-end to SPX...is it really an Advisor? If I have to pay money for such advice, then it's just a middle man working for transaction fees. >Did you mean real returns in excess of some alternative? I would define real returns as that quality on the "return" which exceeds those qualities of the original investment. It's not just a matter of comparing the absolute dollar amount (assuming $ denominated measurement) that was given to the amount that was received. The realized return must have some new quality about it; probably, this is typically talked about as "purchasing power", or similar.
- a_c_s 11y ago
  Robo-advisors don't make money from money, they advise and robotically implement people's preferences on how to allocate their own money. Their strategies generally boil down to making it easy for somebody to buy a diversified portfolio of low-cost ETFs and/or mutual funds, which is pretty standard investment advice for most people. They offer services like offering simple portfolios, rebalancing the portfolio as well as some fairly mechanical accounting tricks like tax loss harvesting. (In contrast, high-frequency trading algorithms are the electronic equivalent of day-traders and do try to make money from money)
- vimarshk 11y ago
  They need to solicit money because their money would never be enough. Even at millions of AUM their margins are suppose to be very low to get more people on the platform. The big profitable players have trillions of AUM just for comparison.
vimarshk 11y ago
I think you raised a fair point about existence in 10 years. I feel there will be consolidation in this space. Either big players acquiring smaller ones for AUM growth or collusion between two small players. The point on WiseBanyan is interesting. I feel there are other markets like APAC where this model can be replicated by some of these startups. That way they can become bigger quickly.

jsprogrammer 11y ago

I think that the whole space may suffer from the, "If they are so good at making money from money, why do they need to solicit my money? Why don't they take their own money and use their own strategies to make their own profits?" problem. Maybe I am wrong. Is there a 0-cost Robo Advisor (that actually produces real returns) in existence?

AjithAntony 11y ago
> If they are so good at making money from money, why do they need to solicit my money? You mean the VC's? Because the strategies of these conservative robo advisors is far from the kind of expected return that a VC wants. You mean the customers? Why pay anybody to manage a stock portfolio? Each one has a slightly different value proposition, but in the end, it is just easier. It is valuable to some people. Just like paying anybody else for a service. > Is there a 0-cost Robo Advisor Wisebanyan is going with a "free" service and upselling extras. I don't forsee it going well unless their costs are actually low. I do have an account with them and 4 other robos. > (that actually produces real returns) in existence? You mean for the VCs? dunno. For customers? Of course. Most are just index funds. If the market is up then they all had real returns. Did you mean real returns in excess of some alternative? Depends on the alternative.
- jsprogrammer 11y ago
  If a Robo Advisor is just a front-end to SPX...is it really an Advisor? If I have to pay money for such advice, then it's just a middle man working for transaction fees. >Did you mean real returns in excess of some alternative? I would define real returns as that quality on the "return" which exceeds those qualities of the original investment. It's not just a matter of comparing the absolute dollar amount (assuming $ denominated measurement) that was given to the amount that was received. The realized return must have some new quality about it; probably, this is typically talked about as "purchasing power", or similar.
a_c_s 11y ago
Robo-advisors don't make money from money, they advise and robotically implement people's preferences on how to allocate their own money. Their strategies generally boil down to making it easy for somebody to buy a diversified portfolio of low-cost ETFs and/or mutual funds, which is pretty standard investment advice for most people. They offer services like offering simple portfolios, rebalancing the portfolio as well as some fairly mechanical accounting tricks like tax loss harvesting. (In contrast, high-frequency trading algorithms are the electronic equivalent of day-traders and do try to make money from money)
vimarshk 11y ago
They need to solicit money because their money would never be enough. Even at millions of AUM their margins are suppose to be very low to get more people on the platform. The big profitable players have trillions of AUM just for comparison.

vimarshk 11y ago

I think you raised a fair point about existence in 10 years. I feel there will be consolidation in this space. Either big players acquiring smaller ones for AUM growth or collusion between two small players. The point on WiseBanyan is interesting. I feel there are other markets like APAC where this model can be replicated by some of these startups. That way they can become bigger quickly.