Digital brokerage Ally Invest launches human wealth management

Ally Invest, the online brokerage division of digital banking firm Ally Financial Inc., has launched a full-service wealth management business.

Investors with a minimum of $100,000 can receive financial planning and ongoing guidance from a dedicated financial adviser. Ally Invest Wealth Management will charge an annual advisory fee that ranges from 0.75% to 0.85% based on the portfolio balance.

Ally first stepped into investing in 2016 with the acquisition of TradeKing for $275 million. It has supported self-directed investing and a pure digital robo-adviser, but this is the company’s first foray into human advice, said Lori Spangard, senior director of Ally Invest Wealth Management.

“We are definitely still leveraging the strength of our digital platform with wealth management,” Spangard said. Clients will sign up online and receive consultations, goal planning and other services in a digital experience, she added. “Our digital DNA is intrinsic in everything we do, and we applied that here.”

Ninety percent of advised clients aren’t interested in purely digital wealth management, and 88% of robo-advised clients would consider hiring a human, according to a survey of 1,500 clients published by The Vanguard Group Inc.

Ally’s account minimum and fees are comparable to so-called hybrid robo-advisers like Personal Capital or Betterment Premium. However, the minimums and fees are higher than offerings like Vanguard Personal Advisor Services, which charges a 0.30% AUM fee with a $50,000 minimum, or Charles Schwab Intelligent Portfolios Premium, which requires a $25,000 minimum and charges a $30 per month fee.

What separates Ally from those offerings is that clients will be connected to a single, dedicated financial adviser rather than a team of advisers or call center, helping to build more personal relationships with clients, Spangard said. Clients will also receive advice on held-away assets that are aggregated on Ally’s platform.

Ally is starting small with an adviser head count of 15 but it plans to grow the team as it onboards clients. All the advisers are either certified financial planners or are close to earning the certification, and they are trained in behavioral finance, Spangard said.

“We really believe that as people are moving along the spectrum of their financial journey, their lives get more and more complicated,” she said. “They sometimes need access to someone who can be their guide.”

New research from Cerulli Assocates shows how important it is for wealth management firms to build relationships earlier rather than later. By age 50, many investors have enough experience to either turn over full control of their portfolio or they decide to remain self-directed. The segment of, “advice seekers,” defined as those who have do-it-yourself tendencies but are actively looking for additional investment advice, tends to peak among those in their 30s and drops as people age, Cerulli found.

“These investors want one-on-one help but likely have yet to accumulate the assets to drive suitors to their doors,” Scott Smith, a director at Cerulli, said in a statement. “It’s imperative to create valued relationships with these investors as they mature into optimal clients.”

Connecting with younger investors looks to be a key part of Ally’s strategy to grow its wealth management business. In a statement, Diane Morais, president of consumer and commercial banking at Ally, said receiving professional advice earlier in life can help people “take control of their financial future.”

“Our new wealth management offering makes dedicated, holistic human advisory more accessible by lowering the barriers to entry,” Morais said.

[More: Despite the hype, future of advice is hybrid: Vanguard]