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Can You Trust a Robo-Advisor with Your Money?

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Yesterday the S&P 500 dropped by over 29 points (about 1.2%), the largest single day decline so far in 2017. Meanwhile, Olivia Oran explains at Reuters that Goldman Sachs is preparing to put people’s life savings in the hands of a computer. Are investors going to rely on this advice when stocks crash? Will they put their financial survival in the hands of an algorithm? We shall see. Goldman isn’t alone. Oran writes:

Goldman has for years grappled with how to tap into the mass affluent segment, broadly defined as those with less than $1 million in investable assets, without diluting the brand of its private wealth business which is considered a jewel within the bank, according to people familiar with the matter. Goldman’s U.S. private wealth business typically advises clients with an account size of around $50 million.

Goldman has in the past considered expanding Ayco, a wealth advisory firm it purchased in 2003, as a way to push more deeply into the mass affluent segment, the people added.

While the robo-advice market was initially developed by startups such as Wealthfront and Betterment with ambitions of upending the traditional financial advice sector, large firms such as Charles Schwab Corp (SCHW.N) and Vanguard have launched similar services.

Other large firms are partnering with or buying existing players.

UBS Group AG (UBSG.S) and Wells Fargo & Co (WFC.N) are partnering with online financial adviser SigFig Wealth Management, while BlackRock Inc (BLK.N) acquired FutureAdvisor.

Morgan Stanley is launching its own robo-advisor later this year, primarily for the children of its existing clients. CEO James Gorman has said that firms which combine digital and human advice will be more successful in the future.

Read more here.

 

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.