Robo 3.0: The rise of the asset managers and the robo advisor response
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3 March 2016William Trout
In Disrupting the Disruptors: RIAs, Online Brokers, and the Challenge to the Automated Investment Advisors, published back in December 2014, I looked at how traditional wealth managers were responding to the threat posed by a new generation of automated investment advisors, the so-called robo advisors. Since that time, much has changed in the world of automated investments. The early days of robo advisory (what I call Robo 1.0) came to an end when vertically integrated asset managers Charles Schwab and Vanguard launched their own platforms (Robo 2.0). More recently, pure play asset managers BlackRock and Invesco have entered the fray. My latest report examines the strategic motivations of these asset managers and the degree to which they can sustain the momentum created by the first generation of robo advisors. It also examines the implications for traditional investments providers, including the HNW focused wirehouses. Lastly, it asks to what degree the entrance of the asset managers will spark the launch of vastly more sophisticated and scalable robo advisory solutions (Robo 3.0) by deep pocketed technology firms and innovative incumbents.