A white-labeled robo-adviser is launching an automated advice platform that integrates directly with online brokerage Interactive Brokers and that Interactive hopes will attract small advisory firms away from its competitors.
TradingFront is designed to serve small to midsize independent advisers, a segment of the independent advice market that has been traditionally overlooked by legacy technology platforms, at an attractive price point, according to its founder Yang Xu.
Potential targets include the independent advisers that have been using tech provided by TD Ameritrade and ETrade now that those firms have agreed to be acquired by Charles Schwab and Morgan Stanley, respectively. The discount robo-advice provider is hoping to catch the eye of advisers who may not be happy making the transition to a new brokerage firm and instead want to kick the tires on an automated advice platform.
“We see this as a fast-growing segment that is being disrupted and potentially abandoned by the mega-custodian consolidation happening, so a very attractive segment of thousands and thousands of RIAs,” Xu said in an email.
The technology is primarily available to clients that custody at Interactive Brokers, although data reporting is set up to work with competing custodians, Xu said.
In November, Charles Schwab announced its plan to acquire TD Ameritrade, a plan that would tack on another 12 million client accounts and $1.3 trillion in assets for Schwab. Months later in February, Morgan Stanley said it would acquire ETrade in a $13 billion all-stock deal.
“Advisors today need an efficient, digital platform to engage their clients and prospects — while driving productivity from a unified tech stack built directly into a custodian that doesn’t compete with them,” Xu said.
As the consolidation of custodians disrupts wealth management, some advisers are becoming worried about their options and are looking for low-cost alternatives, he said. “Custodians by their role have to serve all types and sizes of adviser, so end up diffusing and genericizing their technology.”
Investment in technology has been a particularly acute problem for the independent RIA community. Many advisers face the difficult task of selecting the right pieces of software to meet their particular needs — and have to do it all on a tight budget.
TradingFront comes with a client portal and mobile app, and can help drive back office efficiency through an integrated CRM, reporting, account aggregation, trading and rebalancing, Xu said.
In a crowded marketplace, Xu hopes to differentiate his product by offering more trading options for advisers. While similar robo-advisers offer a menu of ETF or stock options advisers can deploy for clients, Xu said his platform gives advisers the choice to create their own model portfolios and back-test the performance.
“We are targeting the small to mid-size independent RIA and breakaway broker who has been typically underserved by the legacy technology platforms and custodians,” he said.
Regulators found Bank of America's monitoring software had a known flaw Merrill left uncorrected for years.
While AI has become a go-to research tool for affluent investors, new HSBC research suggests human advisors remain the deciding voice when investment decisions are made.
A 5-4 ruling preserves the Federal Reserve's independence for now, but the legal fight over presidential removal power is far from settled.
For years, large firms have been facing penalties and questions from regulators over interest rates for clients’ cash accounts.
Market volatility can be stressful, but it also represents opportunity for advisors and their clients.
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
