We've reached the saturation point for robo-advisers

The news of an executive reshuffling at Wealthfront [founder Andy Rachleff is returning as CEO, replacing Adam Nash] comes at an interesting juncture for the robo-advisory space. With growth slowing for some of the main players even as more big names enter the game, it's worth considering if we're seeing the peak of the robo-adviser movement. My view has always been the same — robo-advisers are mostly just a fancy interface implementing a low-fee indexing strategy that amounts to little more than a target-date mutual fund or some version of the Vanguard Tax Managed Balanced Fund. The only reason you would ever open a robo-adviser account is if you are unaware of the fact that you're buying something that already exists in a lower-fee structure. You know, the same reason why people own trillions in closet index funds and hedge funds ... sigh. (More: TD Ameritrade introduces new retail robo-adviser platform) I know I am harsh on issues like this, but I truly loathe seeing high(er) management fees where you can buy something virtually identical for far less. But we're about to see some serious firepower enter the space as Merrill Lynch and Fidelity both join the fray. These are firms, mind you, that I would argue have been behind some serious curves in the asset management space, so their entry here might be more disconcerting than anything else. Still, they will drive huge amounts of assets into their products. So it's not unreasonable to assume that the robo-space will see trillions in assets under management by 2020. Good marketing and sheer manager size will drive the asset growth, if nothing else. So no, this isn't the peak for robos. But we're definitely at a point where the space is incredibly saturated. I suspect that what we've seen here is a product wrapper that is packaged as a shinier-looking version of a product that already exists. And as people realize that they're just buying a tax-managed target-date fund with a bunch of extra fees added on, they'll close up these accounts and buy the real thing instead. (More: Riskalyze draws $20 million in capital for robo platform and other adviser products) As that trend reinforces itself, it won't spell doom for these players, but it will mute growth substantially, just as we've seen across the entirety of the active management space — which more and more people are realizing is little more than a version of something that exists in indexing form already. Cullen Roche is the founder of Orcam Financial Group and Pragmatic Capitalism, where this blog post first appeared.