Origin's new low-fee AI ‘robo-planner’ (that still won’t threaten human advisors)

The reality about the financial advice industry today is that personalized, comprehensive advice is expensive. Per the most recent 2024 Kitces Research on Productivity, a client can expect to pay at minimum $2,500-$3,000 per year for comprehensive financial planning, with many advisors charging annual minimums of $10,000 or more. As a result, the only people with access to personalized financial advice – that isn't tied to the sale of a financial or insurance product – tend to be those who already have either the assets (for those billed on AUM) or income (for those paying hourly or subscription fees) to support the multi-thousand-dollar per year cost for that planning relationship in the first place.

READ MORE: Monthly Spotlight: AI in Wealth

The high typical cost of hiring a financial advisor naturally raises many questions about why the industry hasn't found a way to serve clients who can't afford to pay several thousand dollars or more, who are arguably those in need of the most help with getting their finances on track. One of the most common criticisms is that financial advisors are only willing to serve those who will pay them the most – that as long as there are prospective clients willing to pay $10,000 or more for financial planning, the mass of advisors will always gravitate towards those clients. And there may be some truth to that: The simple law of supply and demand states that the price of an in-demand good or service is dictated by its relative supply, and at the moment there are too few financial advisors to meet the demand from the wealthy and mass affluent, let alone those lower on the economic scale. After all, when financial advisors often cap out at no more than 100 in-depth financial planning relationships, approximately 100,000 CFP professionals means there are only enough advisors to serve about 10 million households, a small fraction of the more-than-130 million households in the US. And so it's almost inevitable that advisors will look to serve wealthier clientele until the demand at the top of the market is satisfied and there's an incentive to look for opportunities elsewhere.

But there's also a deeper story about the pricing of financial advice, which is that it's not only about supply and demand, but about client acquisition cost. In order to serve clients profitably at a more "affordable" price, you need a lot of clients to cover the cost of an advisor and overhead. And while there are challenges in trying to serve comprehensive financial planning clients at high volume (since most advisors tend to cap out at 75-100 clients, which sets a relatively high floor on the per-client fee needed to earn a manageable living), the bigger issue lies in how to market the advisor's services efficiently enough to bring in the necessary volume of clients without breaking the business model. In fact, Kitces Research on Advisor Marketing also finds that the acquisition cost to get a single client is typically more than $4,000 in hard-dollar marketing and time costs of the financial advisor… effectively setting a minimum floor on what advisors must earn in the first year or two just to recover the cost of getting the client in the first place.

Which is exactly the reason why so many efforts to provide low-cost financial planning to the masses (including the robo-advisor movement of the 2010s) have failed: Because scaling the acquisition of low-paying financial planning clients proved too expensive for the amount of revenue generated per client. Or in other words, the less each client is willing to pay for advice, the harder it is to be profitable given the client acquisition costs. And the more clients are needed to sustain the business model (given lower revenue per client), the more expensive it typically becomes to market to each new client at ever-increasing levels of required marketing scale – ultimately leading to a death spiral from which most of the first generation of robo advisors didn't recover.

Against this backdrop, Origin debuted in October what it refers to as "the first AI financial advisor regulated by the SEC". Originally launched in 2023 as a budgeting app, the refreshed Origin is billed as an "always on financial advisor", and combines essentially three pieces of software into one AI-powered bundle. First, there's a budgeting tool where users can monitor their spending and ask the app's chatbot for ways to save money (e.g., by automatically tracking subscription payments and allowing users to cancel unwanted subscriptions through the app). Second, it includes a brokerage app where users can either self-direct their investing (with the AI chatbot facilitating research and market data) or invest in Origin's recommended index portfolios or curated "thematic stock bundles". And lastly, Origin includes a financial planning tool to run future projections and compare different scenarios (e.g., to show the effect of buying a house), with automatically generated planning strategies and recommendations to improve chances of success. All these tools are being offered by Origin for the low price of $1 for the first year, and $99/year thereafter.

At a high level, the debut of Origin's AI financial advisor is a notable new step in the development of low-cost automated financial advice and what can be accomplished with AI. In contrast to the original generation of robo advisors that offered automated investment management with little to no individual financial advice, Origin offers a much more comprehensive package (albeit one tailored to a user base that's presumably younger and less affluent than the average RIA client and is focused on cash flow, growing wealth, and homeownership, rather than retirement, tax, and estate planning). In other words, Origin aspires to truly be an AI financial advisor, with an emphasis on the advice rather than (just) managing investments.

What's also different about Origin compared to the robo advisors of 10-15 years ago is that Origin doesn't claim to have any desire to compete directly with human financial advisors. Whereas robo advisors like Betterment and Wealthfront originally sought to replace financial advisors – with Betterment going so far as to claim in a (quickly deleted) blog post that "Financial Advisors Are Bad For Your Wealth" – Origin states on its own website that its planning tools are "no substitute for personalized advice from a financial planner", and even offers the ability to book sessions with CFP-certified human advisors. So it seems that Origin is less about trying to drive down the cost of advice for everyone and disrupt the human advice model than it is about offering a more full-featured financial planning app for DIYers who weren't necessarily inclined to work with a human advisor to begin with.

But while it makes sense for Origin to focus on the DIY market rather than compete with advisors directly for clients who would rather outsource to a human advisor than figure things out on their own (or choose which app can best figure it out for them), it still remains to be seen whether Origin can overcome the client acquisition cost problem that has plagued mass-market financial planning tools from the beginning. Especially when Origin aims to charge less than the revenue per client that already buried robo-advisors given the acquisition costs. As with the robo advisors, Origin has leveraged technology to commoditize an area of financial advice (investment management in the case of the robo advisors, and budgeting and plan projection in the case of Origin), which leaves it vulnerable to having its margins crushed by bigger competitors who offer similar tools but have lower acquisition costs – as happened with the robo advisors when Vanguard and Charles Schwab began offering their own cheaper automated portfolio management tools that they could cross-sell efficiently (i.e., with lower acquisition costs) to their existing millions of customers. The good news for Origin is that by giving away its software for (almost) free, there isn't much room to be undercut on price. But the bad news is that Origin will still need to figure out how to attract DIY-minded users efficiently enough to support a price that's cheaper than a Netflix subscription. Or at the least will have to substantively raise their fees by 3X, 5X, or 10X just to have a chance to break even on the profitability of serving a client.

The key point is that while it's good that entrepreneurs are seeking out ways to offer better financial tools to individuals who can't afford (or don't want to pay) the cost of a human advisor, it's hard to ignore the feeling that AI planning tools like Origin are bound to learn the same hard lessons that the robo advisors did more than a decade ago: That the high minimums of advisors aren't driven by greed, or even by the cost to service clients, but by the cost to acquire them. And like in the robo advisor era, if competition in the space increases to a point where AI planning tools simply can't keep up the growth rates needed to sustain their current business model, it's possible that we'll see tools like Origin start to pivot away from the direct-to-consumer market and towards more advisor-facing tools. Just as automated portfolio management eventually became embedded in the infrastructure of advisory firms, AI tools – such as chatbots to surface planning ideas and tools that can recall client data buried in past meeting notes – could also become standard as advisors increasingly go "cyborg" to let technology handle more and more of the technical planning tasks so they can focus on their client relationships. But in the meantime, the question will be whether AI tools like Origin can really be the key to making tech-driven financial "advice" affordable to the masses – or if, like the robo advisors before them, they'll find that it's difficult enough to get users willing to pay anything for advice to make the business model viable.

This article is part of our Monthly Spotlight series, which in January focuses on AI in Wealth. Full coverage can be found here.

Ben Henry-Moreland is a Senior Financial Planning Nerd at Kitces.com, where he specializes in writing and speaking on financial planning topics including tax, practice management, and technology. He also co-authors the monthly Kitces #AdvisorTech column. Drawing from his experience as a financial planner and a solo advisory firm owner, Ben is passionate about fulfilling the site’s mission of making financial advicers better and more successful. 

Michael Kitces is the Chief Financial Planning Nerd at Kitces.com, dedicated to advancing knowledge in financial planning and helping to make financial advisors better and more successful. In addition, he is the Head of Planning Strategy at Focus Partners Wealth, the co-founder of the XY Planning Network, AdvicePay, New Planner Recruiting, fpPathfinder, and FA BeanCounters, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View.