Robo-ish Adviser

To us, the evolution of the robo-adviser market is as much about the increasing integration of technology into wealth management as it is about the relative benefits of algorithmic trading. This means we may need to broaden our current definition of robo-advisers to include companies like Personal Capital that leverage technology rather than being dominated by it.

On a scale that ranges from 0% interaction with a live person to a human interaction only platform, Personal Capital lies somewhere in the middle. Their positioning is that through technological efficiencies and automation, they can provide “high-touch wealth management at an affordable price.” Their fees are certainly at the high end of the robo-adviser spectrum, ranging from 0.49% to 0.89% but at the lower end of traditional wealth management advisory fees.

Personal Capital offers a variety of services, ranging from account aggregation, tracking and reporting and investment management to financial concierge and private banking services (through an alliance with BNY Mellon). Everything begins with a personal phone consultation with a financial advisor (and every page on the website urges visitors to schedule a consultation), putting the human element front and center. This, however, is balanced by strong merchandizing of communication technologies, including an app for mobile devices to help one stay in touch at all times.

Personal Capital is designed to appeal to a swath of investors that believe in the value of technology but still want effective human intervention. Will they go for a model that has a human element but keeps it at a phone’s or technological device’s length away? We suspect that as the millennial generation starts to seek more advice and guidance regarding their assets, this may be an attractive alternative to “their father’s wealth manager.” As always, we will watch the emergence of new delivery models with interest.