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> how primitive the big firms' offerings are My take (as a previous employee at Betterment): Wealthfront/Betterment/et al came out to much fanfare and the prom
by rco8786 5y ago
> how primitive the big firms' offerings are
My take (as a previous employee at Betterment): Wealthfront/Betterment/et al came out to much fanfare and the promise of disrupting the traditional wealth management industry.
At first, it seemed like they were right. AUM growth was looking like a hockey stick...this caused some panic at the big firms' who hurried to launch their own offerings (this is like 2015-ish) which were minimal at best, and still mostly just "marketing products" - a thin roboadvisor veneer designed to drive users into their traditional businesses.
Over the next 2-5 years and up to now, it is becoming/has become obvious that roboadvisors are not, in fact, going to disrupt the industry and it's rather a race to the bottom in pricing with razor thin (or non-existent) margins...so the actual robos have largely stagnated and the big firms stopped investing into their own solutions.
- hotpotamus 5y ago> it's rather a race to the bottom in pricing with razor thin (or non-existent) margins Isn't that the point of automation? Doesn't the saying go, "your margin is my opportunity"?
- rco8786 5y agoIf you can get the volume, yea. But seems like the total robo market is smaller than everyone thought.
- TuringNYC 5y agoAgree in general, and I think they were great M&A opportunities for the big firms. Think of Banking+Lending+Investments as a natural stack over much like Photo+Music+Games+News+CloudStorage are in the FAANG world. They keep the user sticky. Once you've got Photo+Music+Games+News+CloudStorage in the Apple ecosystem, or in the Google Ecosystem, for example, you're way less likely to leave. Yet in banking, there arent great stacks where you can keep your relationship across the board. For JPMC, an acquisition of a Betterment or WealthFront (or others) would be a drop in the bucket.