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Of all the world’s industries, you’d be forgiven for mistaking finance—and all of its attendant services—as the most outdated. If we’ve learned anything from the explosion of emergent web-based technologies, however, it’s that the Internet loves stodgy. In the humdrum of tired ways, there’s huge potential for innovation, and the Internet enables this on the cheap in a way never before possible.

Automated investment services, or robo-advisors, are particularly interesting in the greater tapestry of fintech, or financial technology, because they use technology to optimize wealth management.

Long the province of professional financial advisors, wealth management is undergoing a monumental change whose fundamental question is this: are developing tech shifts in the financial services industry poised to overtake the old-fashioned human advisor?

The larger space of fintech

Innovators within the investment and financial landscape at large have begun realizing that the business of moving money—whether that be crowdsourced funding a la peer-to-peer lenders like Lending Club, mobile-payment solutions such as Square, or more efficient investing via automated algorithms with companies like Betterment or Personal Capital—is ripe for change. It’s the innovator’s dilemma in powerful motion.

Fintech is a nascent movement with momentum. Regardless of the suggestion that we’re witnessing a growing fintech bubble, the fact remains that in 2013, the world’s fintech companies raised almost $3 billion. That’s a staggering explosion of capital from 2008, when fintech investments stood at $930 million.

Many of these companies have grown astronomically. As Jonathan Shieber at TechCrunch noted in October, Wealthfront, which competes in the robo-advising space along with Betterment and Personal Capital, exceeded $1 billion in assets under management (AUM) within the span of two-and-a-half years. And this was on the heels of its $64 million Series D in October. Here are the total funding amounts to date for major U.S. robo-advisors using data from CrunchBase. We’ve omitted WiseBanyan, which is among the bigger players, because it has raised an undisclosed amount.

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Fintech is revolutionizing financial services, and robo-advisors are a strong example of this action. But what about the reaction? Technology moves fast. Can traditional advisors keep up? Is there room for coexistence?

Here at FindTheBest, we’re helping people do better research using our extensive collection of structured, interconnected data. As some competitors in the robo-advisor space go full tilt towards automation, which opens up wealth management to a younger and largely untapped demographic, others are charting a course that preserves the human role in wealth management. We looked at two such competitors in the space—one client facing and the other exclusively for registered financial advisors—to add some nuance to a developing story.

How 2 companies are doing it differently

Here are some of the biggest client-facing (retail) robo-advisors in the U.S., with information gathered from each company’s online content and market research conducted with leading industry sources:

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Personal Capital is an advisor-executed platform (as opposed to a fully automated one) and generally takes an index approach instead of trying to beat the market. This strikes at the heart of what makes automated investment services so intriguing: by combining a solid and time-tested index approach with the ability to realize risk and cost efficiencies through technology, customers have the potential to realize higher returns than they might with a traditional advisor.

“We do have more human oversight than some of the other online-only players,” said Craig Birk, VP of Portfolio Management at Palo Alto-based Personal Capital. “We actually think that the online-only automated services that exist are a good solution for many people, but just aren’t necessarily the right solutions for those that have a little more complex situations and need more personal attention.”

For Birk, the approach boils down to efficiency and aligning reward with risk appetite.

“You can have a good portfolio, but it could be way too risky for your situation and then it’s not right for you. Or you could have one that has the right level of risk level, but it could be built with a bunch of high-fee stuff as a result of some guy’s stock picking and that kind of thing, which isn’t right, either,” he said.

Personal Capital is a lot closer to the old ways of wealth management than the likes of Betterment, and it differentiates itself as a platform for investors with more complicated financial situations (probably not your average twenty-something who might be more attracted to a fully automated approach with less overhead and thus lower fees). In short: it’s straddling the middle ground between full automation and human interaction (though remotely). But that hasn’t stopped venturing minds from going a step further to adapt.

This summer, a company called Upside raised $1.1 million in funding to bridge the gap between SEC-registered investment advisors and automated ones.

“We have developed our platform exclusively to serve investment advisors,” said Tom Kimberly, CEO of Upside. “That means we’ve developed access and flexibility around our platform that Betterment hasn’t, because Betterment developed its platform at its core to serve retail clients.”

Use of Upside, in contrast to some other services, is limited to registered financial advisors. Many traditional advisors want to offer their clients a way to leverage a newer, algorithmic way of investing, but they still want to keep their clients.

To be sure, there’s a fair amount of nuance to traditional wealth advisors. It’s not that these advisors provide a bad service as is or even a service with no discernible market. Quite the contrary—there is a market for the finely tailored, personalized approach. Advisors get to know their clients, and for investors whose personalities or situations require that kind of relationship, there’s value to be created. Call it one-on-one counseling for the long haul.

The threat of these new technologies is real, though, and that’s where the interesting in-between lies. Upside is betting on a hybridization model.

Kimberly started Upside with an undergrad friend of his, Juney Ham, after formative international stints in retail banking and financial services consulting. The idea, as TechCrunch’s Frederic Lardinois wrote about back in July, was to compete with Betterment and Wealthfront. But the pair soon discovered that breaking even on a new customer was a costly, time-intensive process. Moreover, as Lardinois elucidated, there was really no one in the automated investment space serving entrenched advisors, a group that already has its own clients but likely is concerned about these seismic, technological shifts in the industry.

Although Kimberly frames the value add of Upside in much the same terms as other automated investment platforms that populate the space, he’s clear about Upside’s position. “The value we add is about user experience, automation of processes and operations that are ripe for automation, and building a model that incorporates the best of that technical capability coupled with human advising capabilities and behavioral coaching.”

While Upside has a risk-tolerance assessment during the onboarding process to gauge a client’s risk appetite and the corresponding asset strategy, Kimberly says the focus is more on a “goal-oriented, mental-based approach to investment management.” For Upside, that’s grouping clients according to one of three top-level objectives: invest in the market, invest specifically for retirement, or invest with a certain goal in mind (ex: an emergency fund or the down payment on a house).

Kimberly is seeing two use cases. On the one hand, some registered advisors want to group lower-value clients who don’t meet minimums and place them with Upside as a cost-effective conduit until the advisor is ready to take the client on directly. On the other hand, Upside can augment the advisor’s pre-existing business. Broadly speaking, Kimberly is optimistic that Upside can position itself to acquire a share of the discretionary advisor portfolio over time.

“The platform we’re building is ultimately to help advisors serve clients they otherwise wouldn’t serve, but who are ultimately still attractive to [a financial advisor],” Kimberly said. Kimberly believes Upside can become a “kind of emerging affluent component of [financial advisor’s] traditional high net-worth business [ . . . ] it’s very much about creating a pipeline [for a] younger, asset-accumulating demographic.”

Kimberly and Upside have taken other steps to stay on the cutting edge, too. Though the San Francisco Bay Area still exerts a forceful pull on human and financial capital alike when it comes to all things tech, Upside maintains a St. Louis-based engineering arm in addition to its San Francisco branch.

According to Kimberly, the decision to leave one foot in St. Louis started in October 2012, when he attended a fintech accelerator program called SixThirty, which was started by Wash U.-grad Jim McKelvey. McKelvey and Jack Dorsey are the co-founders of Square. Two things happened next. Upside received an investment from St. Louis-based Cultivation Capital, where McKelvey is a general partner. Then Kimberly discovered that St. Louis is home to a strong engineering culture.

When the time came to grow the team, the decision was a no-brainer. “We’re running a business, [and] the cost base is just a lot more practical than [in] San Francisco,” Kimberly said.

Whether fully automated or somewhere in between, automated investment services belong to a fintech landscape imbued with a desire—and the means with which—to transform slower, inefficient transaction methods. Critical, too, is a fundamental difference in the consumption habits between generations. As Kimberly notes, “It’s clear that our generation consumes products and services differently than our parents’ generation.”

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