Capital One joins the hybrid robo movement

Capital One joins the hybrid robo movement
Big bank meshes human advisers with its digital investing platforms.
JUN 17, 2015
Capital One has jumped head-first into the hybrid robo-advisory movement with the debut of Capital One Investing, a digital platform that pairs its automated investing tools for retail investors with human advisers. The brokerage already has two digital investment platforms: PortfolioBuilder, a do-it-yourself asset-allocation tool that lets investors build a portfolio of six exchange-traded funds based on each individual's goals for $18.95, and the ShareBuilder investing plan, which provides consumers with access to mutual funds, ETFs and 7,000-plus stocks. The new arm of Capital One has paired those platforms with human advisers. Yvette Butler, president of Capital One Banking, said the firm’s hybrid-robo offering is geared to serve the country’s mass-affluent investors. “Technology is a critical piece of the solution, but it isn’t the complete answer for many investors,” Ms. Butler said. “We’re positioned to deliver the right combination of digital tools and access to trusted, affordable advice and guidance.” As of right now, investors can speak with a Capital One adviser in New York, New Jersey, Maryland, Virginia, Texas, Louisiana and Washington, D.C. In the fall, they will be able to speak with an adviser nationwide through an advice center, communicating through phone, email or video chat. There is a $25,000 minimum investment for investors seeking advice from an adviser in the bank. For customers of the online PortfolioBuilder platform, it's an investment minimum of $200. There is no minimum requirement to call or send a message to the advice center and receive general financial-planning support. It's yet another firm's attempt to reach retail investors by leveraging digital channels. "There are a lot of people who are very anxious about the retirement or investment adviser process — they're walking into a situation with somebody who knows a lot about investing and they don't know anything about investing," said Kendrick Wakeman, president and chief executive of FinMason, a technology company that analyzes investors' portfolios and risk tolerance. "Robo-advisers allow people to take more control of that process," he said. Jon Stein, chief executive of Betterment, the online automated investment platform that has its own retirement calculator, said that Capital One Investing has nothing special for investors. "It looks to be a product with a very shallow feature set," Mr. Stein said, adding that consumers have to manually rebalance and pay for each trade and that there is a lack of tax optimization. This is not the first attempt at launching a hybrid-robo offering. Vanguard recently launched its own robo platform, Personal Advisor Services, in May, which has a $50,000 investment minimum. It had been in pilot mode for two years, and had $17 billion in assets under management as of May 5. Some say there is a commoditization of robo-advisers going on in the industry. Investors now have more options for online brokerage, advice and automated investment platforms than ever before. With the addition of human advisers to these digital platforms, there will be more blurred lines between traditional wealth management and robo-advisory offerings. "It will be much harder over time to bucket different solutions as being a robo-adviser versus a traditional adviser," said Lee Kowarski, vice president of kasina, a financial services research firm. "I think we'll see a number more of these. “Firms that have traditional brokerage offerings already have or will be rolling out more technology solutions for robo-only or a hybrid, depending on their target market," he added.

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