Ritholtz Wealth launches Betterment-powered robo advice platform

Ritholtz digital platform getting a second liftoff with Betterment for Advisors

Jul 15, 2019 @ 6:50 am

By Ryan W. Neal

Ritholtz Wealth Management is relaunching its digital advice product, Liftoff, using Betterment for Advisors.

For Betterment, which typically keeps details about its for-advisers product close to the vest, it's a big get — if not in terms of assets, then certainly in terms of media exposure. Ritholtz Wealth employs some of the most recognizable names in financial advice, including CEO Josh Brown and CIO Barry Ritholtz.

The opportunity to leverage that exposure to market Betterment as not just a direct-to-consumer robo-adviser, but as a trusted digital platform for advisers, is not lost on Jon Stein, Betterment's CEO.

"One of the things that I think the Ritholtz team does really well is brand marketing and advice. I think they are just known as a trustworthy firm by hundreds of thousands of people," Mr. Stein said. "The vision for that Betterment for Advisors firm is to work with advisers who have this kind of reach to help them reach millions more clients."

(More: RIA launches its own direct-to-consumer planning and robo-advice technology)

Betterment has long partnered with the XY Planning Network as a platform for younger, upstart advisers who can't, or don't want to, work like traditional RIAs. But the fintech firm has made a concerted effort recently to make its for-advisers product more appealing to larger RIAs.

Betterment for Advisors most recently added ACATS transfers to help advisers transfer securities from other brokerages to Betterment, and in April added mutual funds from Dimensional Fund Advisors. It also revamped its adviser-facing dashboard, gave advisers more customization over allocation models and added commodities.

These updates didn't play a big role in deciding to move to Betterment for Advisors, said Michael Batnick, Ritholtz Wealth director of research. It simply came down to Betterment combining a simple, effective investment philosophy with best-in-class technology.

"For the average investor, especially people at 25 years old with a $30,000 balance, there's no need to get cute," Mr. Batnick said. "This is for people who are serious about building a base to compound for the rest of their life."

Ritholtz originally launched Liftoff in 2014 using technology startup Upside Financial. Envestnet acquired Upside just a few months later and has since spoken very little of its robo-advice capabilities.

Liftoff has since remained mostly dormant, attracting just a few million in assets, Mr. Brown said.

"We just let it sit where it was and were never excited about it," Mr. Brown said. "Things have changed now. We found a partner we could trust."

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With Ritholtz Wealth's massive media exposure, Mr. Brown said the company was turning down people with smaller accounts. The firm manages about $1 billion in assets, all from either high net-worth households, foundations or charities, and has a 401(k) group as well.

"But it would also be great if to complement that, we had this whole run of up-and-coming, young investors who are working with us on the Liftoff platform," Mr. Brown said, adding that he believes the business model is what the future of the RIA industry will look like. "We're not inventing anything here, I just think we're going to do a really good version of it."

Michael Kitces, partner and director of wealth management at Pinnacle Advisory Group, wonders if the Ritholtz Wealth robo will be any more successful with Liftoff powered by Betterment than when it was with Upside. Aside from institutions like Vanguard and Schwab, even the biggest RIA names are struggling to get meaningful assets on a digital platform, Mr. Kitces said.

"It's interesting to see them give this a renewed effort, but the fact is folks like them haven't been able to make it work yet," he said.

Liftoff has no account minimums and will charge 50 basis points, which Mr. Brown said will be split between Ritholtz Wealth and Betterment. The firm also has a human financial adviser, Matt Lohrius, to provide live advice to clients.

For Mr. Brown, the decision to go with Betterment over any of the other white-label robo-advisers on the market was an easy one. With Betterment, he feels Ritholtz Wealth gets a single platform to handle technology, investment management, compliance and even asset custody, essentially replacing the need for a more expensive TAMP.

"I go to the conferences, I walk through the hall of exhibits, a lot of the stuff looks like the thing that I already struck out on. These guys I know already can do it," Mr. Brown said. "At this stage, in 2019, I'm not playing games, with 'maybe we can do this.' I wanted the best, and these guys have the best."


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