rise of the robo advisors: the growing trend of automating asset allocation strategies

The Emergence of the Robo-Advisor

The Growing Trend of Automating Asset Allocation Strategies

It all started with a game

❖ kaChing is was a popular virtual investing game on Facebook

and a Stanford professor

❖ Andy Rachleff, founder of Benchmark Capital, takes up management of kaChing

Funny storycirca 2009

@#$%^!!!

Fast forward to 2014

And now…

Wealthfront is the largest robo-advisor in the world and manages over $1.5 billion

So, what is a robo-advisor?

–Wikipedia

“Robo-advisors are a class of financial advisor that provides portfolio management online with

minimal human intervention.”

Robo-advisors going after plain-vanilla, asset allocation

❖ Robb-Advisors going after the low-end of brokerage/RIA business with automated asset allocation

❖ $? < 25 bps

Who are the players?

Asset Managers

Portfolio Apps

Algorithmic Portfolio Management

❖ Platforms like Collective2 and Covestor allow investors to synch their brokerage accounts to an automated trading strategy

What’s driving robo growth?

The incumbents are comingSchwab, Vanguard, et al following with their own offerings

Any questions?