White Label vs Hybrid Advisory – Robos’ Strategic Options in a Differentiated Future

Veröffentlicht von am 15. Februar 2017 · 1 Kommentar

The rise of the Robos in Wealth Advisory seems irresistible – too obvious are advantages in the form of rigorous analysis at disruptively low costs. Recent studies show however, that for more complex investment decisions in dynamic environments, clients still seek human advice. John O’Connell of Macquarie describes this hybrid model as the Robo doing the “donkey work” of analysis and the human advisor adding the “gamma” of his experience with clients. Hybrids pose a bundle of strategic questions to Robo firms, with this abstract focusing on the following: B2B or B2C?

“The providers of advisory and investment services already have the clients and the assets”, argues Upside founder Tom Kimberly. The idea is thus to provide white label Robos to financial institutions, allowing them to offer Hybrids to a new costumer segment: Tech-savvy HENRYs, with high incomes but not yet enough wealth for the establishment of an advisory relationship paying off. Betterment Institutional, Motif Investing, Fidelity or Jemstep represent best practices popping up in the market.

But why should the WealthTechs offer banks access to growing customer segments they can over time serve themselves? Charles Schwab announced the launch of a combined human and robo model, “Schwab Intelligent Advisory” for 2017. The Hybrid requires a minimum investment of $25.000 and charges a transaction fee of 0,28%. It provides video calls to discuss financial plans with new clients and ongoing human advice. Schwab offers an exciting new model which could serve as a blueprint for WealthTechs in Hybrid Advisory.

With time at market, every product differentiates – Robo Advisory will pose no exception to that. While B2B and B2C both represent suitable strategic options for the future, robo firms will have to decide for one clear-cut path to follow, in order not to get crushed between white labels and hybrid models.


This article has previously been published on TheWealthTechBook.