RoboAdvisor

In the movie Robocop, a left-for-dead police officer undergoes an experimental procedure that leaves him part man but mostly machine.  With his new-found armour he goes on to be a one man wrecking crew fighting evil.  Enter, “Roboadvisors,” a catchy description for those firms offering investment services at a distance.
The target market is stated as those who are just starting out to those with modest means nearing retirement.  Likely targets are those often ignored by larger institutions and those being shed from firms looking to concentrate on larger and more profitable clientele.
Following completion of all regulatory requirements and the establishment of investment objectives a portfolio of Exchange Traded Funds (ETF) are put in place with rebalancing taking place automatically.  For their services these firms receive a management fee which is added to the fee charged and retained by the ETF.
Some of the claimed benefits of this model are potentially lower fees, transparency and discipline.  However, the largest benefit would appear to be that once set-up there is limited need to re-visit unless circumstances change.
Increasing competition has always benefitted the consumer but I suspect the uptake on this model will be modest.  For the true do-it-yourself types this won’t provide the flexibility they desire.  Nor will it appeal to those who rely on the counsel of a good advisor who can provide much more than strictly what to buy and when to rebalance.  The volatility of the times we live in mean that individuals face a never ending change of circumstances that include changes to job, family and personal circumstances.  Given a choice, having a person in your court to provide context to nightly news bites and provide some direction on which paths to choose and which to avoid seems more important than ever.
What is yet to be seen is what the landscape will look like with the implementation of CRM2 to be rolled out in late 2016.  These are the new guidelines in reporting that are intended to finally provide transparency to fees and performance so sadly lacking in much of the industry to date.  For those of us already fee-based the rollout of CRM2 is largely a non-event.  However, it would be naïve to think that finally having the ability to compare costs and performance in dollar terms won’t lead to further conversations on value and options.
Perhaps RoboAdvisor will be more successful than I imagine.