Schwab preps robo offering

CEO Walt Bettinger says his firm is working on a “groundbreaking” online advice platform, though details and a timeframe remain unclear.
AUG 01, 2014
Charles Schwab Corp. is kicking the tires on an online advice offering, the firm's chief executive, Walt Bettinger, said Friday, teasing it as a platform that would be “groundbreaking” for the firm. “We are fast at work on what we believe will be a groundbreaking and market impacting introduction of an online advisory solution,” he said. He declined to offer more details or a timeframe for the offering. Asked whether the firm was working on its own software or planned to make an acquisition of an existing offering, Mr. Bettinger said he was not ready to make a full announcement. It was also not clear how the platform would be deployed, but it could be a boon for the firm's 1,100 financial advisers as well as the registered investment advisers on the Schwab platform who could benefit from being able to capture the growth in with the low-cost, automated investing offerings. While still representing only a small fraction of the market, online advice platforms, such as Wealthfront Inc. or Covestor Ltd., have grown by offering automated investment and asset allocation for a low fee, around 25 to 35 basis points. Automated online investment platforms hold approximately $15.7 billion in assets under management, according to a recent survey from Corporate Insight analyst Grant Easterbrook. Consultants have touted the potential benefits for advisers who partner with online solutions like Wealthfront or Betterment. Around 31% of registered investment adviser and broker-dealer executives polled in an informal Fidelity Institutional survey said that they planned to incorporate an online model into the existing business . HighTower's chief executive made similar remarks in May in an interview with InvestmentNews, saying the firm was exploring adding online advice as a fourth leg of the firm's hybrid investment advisory and brokerage platforms.

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