Home Financial Planning Digital advice competition for RIA business goes global

Digital advice competition for RIA business goes global

8 min read

The white-label automated advice market is attracting even international attention.

Bambu, a two-year-old robo advice software firm based in Singapore, and DriveWealth, an online brokerage firm that delivers access to U.S. securities markets globally, have teamed up to provide a platform for registered investment advisors.

Using DriveWealth’s self-clearing platform, the robo will be powered by Bambu’s software and will be accessible on smartphones, tablets and desktops, according to a press release.

Features include a one-page overview of all client activities, an investment dashboard that provides portfolio-building capabilities and an application for clients that gives them the ability to manually adjust investment goals and perform analyses of investments, the companies said.

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“As a broker-dealer who services the international market, we have a deep set of regulatory licenses,” says DriveWealth CEO Robert Cortright. “We supply all of the back-end infrastructure, allowing our partners to build customizable solutions and advise their clients directly.”

For digital wealth management, advisors are now spoiled for choice. There are now over a dozen competing offers from software firms, custodians and independent retail robos that have added advisor platforms.

Existing platforms, such as Schwab’s Institutional Intelligent Portfolios, Betterment for Advisors, AdvisorEngine, Oranj and Jemstep, have focused on continually adding more features and announcing new integrations to appeal to broader swaths of planners.

A key focus for advice platforms seeking advisor business is building out existing model marketplaces. For instance, in July Oranj added funds from PIMCO and WisdomTree Asset Management.

Competition in the white label market has also spurred some acquisitions and investment. RobustWealth was among the independent platforms targeting advisors. In May, Pinnacle Financial Group snapped up the digital wealth platform to further its reach into the digital space. With its focus on the high-net-worth client, InvestmentPOD attracted funding from prominent advisory firms including Mariner Wealth Advisors.


The rise of the model marketplace (full session)

Michael Kitces, Moderator, Partner and Director of Wealth Management, Pinnacle Advisory, Hollie Fagan, Managing Director, BlackRock, Estee Jimerson, Managing Director – Head of Asset Manager Distribution & Engagement, Envestnet, Kunal Kapoor, CFA, Chief Executive Officer, Morningstar, Inc., Natalie Wolfsen, EVP and Chief Solutions Officer, AssetMark, Inc.

Adding to the push to provide advisors automated advice options is the further fracturing of the retail robo market. With assets on robo advisory platforms projected to top $1 trillion, there’s no shortage of players hoping to grab a slice of the digital wealth market.

Banks are increasingly launching their own retail-facing robos, convinced they can capitalize on their captive customer base. Retailers outside wealth management have developed robos to offer customers. Even savings apps, which are popular among younger investors, are expanding into the advice space. For example, the savings app Qapital plans to launch its own robo this year after raising $30 million in April.

DriveWealth says it has already picked up small- to mid-size wealth managers from both financial and non-financial institutions as clients, and the Chatham, New Jersey-based brokerage is in discussions with potential partners looking into launching a robo advisory service, Cortright says.

DriveWealth claims it is reducing management fees for advisors by allowing them in turn to lower account minimums. “Traditional wealth managers have a constraint on the number of customers they can accommodate based on their minimum required deposits,” Cortright says.

Bambu was founded in 2016, with subsidiaries in Hong Kong, Malaysia and the United Kingdom, as well as representatives in Africa, Europe and America, according to the firm.

“This is the evolution of robo investing which allows for advisors, big and small, to create proprietary portfolios, as sophisticated as they would like, regardless of the size of investment,” Cortright says.

Sean Allocca

Sean Allocca is an associate editor of Financial Planning, On Wall Street and Bank Investment Consultant.

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