global robo-advisor benchmarking 2017 ... robo-advisor benchmarking 2017 mostly a one-trick pony...

GLOBAL ROBO-ADVISOR BENCHMARKING 2017MOSTLY A ONE-TRICK PONY

BENCHMARKING - STRATEGY - BEST PRACTICES

OCTOBER 2017

CARMELA MELONESENIOR ANALYST

Report ExtractOriginal Report with 169 pages incl. over 80

visuals including graphs, screenshots and charts and plus comprehensive data appendix

GLOBAL ROBO-ADVISOR BENCHMARKING REPORT 2017 | 2

CONTENT

1.0 EXECUTIVE SUMMARY 7

2.0 RANKING 10

3.0 METHODOLOGY 12

3.1 INTRODUCTION 12

3.2 SELECTION OF ROBO-ADVISORS 12

3.3 EVALUATION CRITERIA 15

3.4 PROFILE CONTENTS AND STRUCTURE 21

4.0 STRATEGY 22

4.1 SUMMARY: GROW OR GO 22

4.2 MARKET PERCEPTION 22

4.3 A BOOMING MARKET: FIGURES AND NUMBERS 24

4.4 TYPES OF ROBO-ADVISOR: DIVERSITY RULES 26

4.5 B2B PROVIDERS 30

8 SECURITIES 31 BAMBU 32 BETASMARTZ 33 IGNITION WEALTH 35 INVESTCLOUD 36 VAAMO 38 POLARIS/XUANJI 39

4.6 SERVING IMPORTANT SUB-MARKETS 41

HALAL INVESTING 41 SOCIAL IMPACT INVESTING 41 FEMALE INVESTING 41

4.7 KEY TRENDS 42

4.8 STRATEGIC RECOMMENDATIONS 44


5.0 SUMMARY OF FINDINGS 47

5.1 OVERALL RESULTS 48

5.2 CLIENT ONBOARDING 49

5.3 FINANCIAL PLANNING 51

5.4 PORTFOLIO MANAGEMENT 52

5.5 CLIENT COACHING 53

5.6 CLIENT RETENTION AND ENGAGEMENT 54

5.7 STRENGTHS AND WEAKNESSES AT A GLANCE 56

6.0 PROFILES 57

6.1 8 SECURITIES 57

6.2 BETTERMENT 60

6.3 BMO SMARTFOLIO 63

6.4 CAPITAL ONE INVESTING MANAGED PORTFOLIOS 66

6.5 CLICK & INVEST 69

6.6 FINTEGO 72

6.7 GINMON 75

6.8 HEDGEABLE 78

6.9 INDEXA CAPITAL 81

6.10 LIQID 84

6.11 MAGNETIS 87

6.12 MONEYFARM 90

6.13 NEST WEALTH 93

6.14 NETWEALTH 96

6.15 NUTMEG 99


6.16 PERSONAL CAPITAL 103

6.17 SCALABLE CAPITAL 106

6.18 SCHWAB INTELLIGENT PORTFOLIOS AND INTELLIGENT ADVISORY 109

6.19 SMARTLY 113

6.20 SYGNIA ROBOADVISOR 116

6.21 TRUE WEALTH 119

6.22 UBS SMARTWEALTH 122

6.23 VAAMO 125

6.24 VANGUARD 128

6.25 VZ FINANZPORTAL 131

6.26 WAHED 134

6.27 WEALTH HORIZON 137

6.28 WEALTHBAR 140

6.29 WEALTHFRONT 143

6.30 WEALTHSIMPLE 146

6.31 WESAVE 150

7.0 BEST PRACTICES 153

7.1 ONBOARDING 153

XXX - Comprehensive and clear presentation of the client dashboard/platform and its features 153 XXX - Comprehensive risk assessment 154 XXX - Excellent user experience of the onboarding tool 155

7.2 FINANCIAL PLANNING 156

XXX and XXX – Goal setting and the probability of reaching these goals 156 XXX – Dedicated financial planning feature 157 XXX- Holistic approach to financial planning 158

7.3 PORTFOLIO MONITORING 159

XXX – Portfolio simulations 159 XXX – Portfolio customization and characteristics 160


7.4 CLIENT COACHING 161

XXX – Personal investment strategy video 161 XXX and XXX - Wealth of educational material 162 XXX – Engaging and relatable content 163

7.5 CLIENT ENGAGEMENT & RETENTION 164

XXX - Network-based investing as loyalty enhancer 164 XXX and XXX - Client centricity through a dedicated customer support center 165 XXX and XXX – Engaging client communication via social media 166 XXX and XXX – In-app messaging at its best 167

8.0 AUTHORS 168

DISCLAIMER 169

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TABLE OF CHARTS

Overview of the robo-advisors’ performances 8Ranking 2017 10Comparison with 2016 ranking 11Country coverage of the robo-advisors included 12Types of robo-advisor included 13List and key facts of robo-advisors included 14The structure of onboarding 15Onboarding criteria 17Financial planning criteria 18Portfolio management criteria 18Client coaching criteria 19Client engagement and retention criteria 20Popularity of Google search term ‘robo advisor’ 23North America: Market prognosis for hybrid/pure robos 24RoW: Market prognosis for hybrid/pure robos 24Graphic: Launch years of the robo-advisors in the report 258 Securities key facts 31Bambu key facts 32Betasmartz key facts 33Ignition Wealth key facts 35InvestCloud key facts 36Vaamo key facts 38Xuanji key facts 39Interview quotes on impact investing 41Ellevest: Sneak peek of the client assessment design 42Frequency distribution of total points 47Overall evaluation results 48Client onboarding feature coverage 49Financial planning feature coverage 51Portfolio management feature coverage 52Client coaching feature coverage 53Client retention and engagement feature coverage 54Heat map: strengths and weaknesses of the robo-advisors 56Overall performance of 8 Securities 57Overall performance of Betterment 60Overall performance of BMO SmartFolio 63Overall performance of Capital One Investing 66Overall performance of Click & Invest 69Overall performance of fintego 72Overall performance of Ginmon 75Overall performance of Hedgeable 78Overall performance of Indexa Capital 81

Overall performance of LIQID 84Overall performance of Magnetis 87Overall performance of Moneyfarm 90Overall performance of Nest Wealth 93Overall performance of Netwealth 96Overall performance of Nutmeg 99Overall performance of Personal Capital 103Overall performance of Scalable Capital 106Overall performance of Schwab 109Overall performance of Smartly 113Overall performance of Sygnia 116Overall performance of True Weatlh 119Overall performance of UBS SmartWealth 122Overall performance of Vaamo 125Overall performance Vanguard Personal Advisor Services 128Overall performance of VZ Finanzportal 131Overall performance of Wahed 134Overall performance of Wealth Horizon 137Overall performance of WealthBar 140Overall performance of Wealthfront 143Overall performance of Wealthsimple 146Overall performance of WeSave 150XXX client dashboard 153XXX risk assessment outcome 154XXX investment assistant 155XXX investment projection 156XXX accounts page 156XXX Financial Plan dashboard 157XXX goal setting 158XXX portfolio projection 159XXX investment overview 160XXX investment strategy video 161XXX education website 162XXX blog 162XXX e-magazine 163XXX Program 164XXX customer support website 165XXX customer support website 165XXX campaign 166XXX YouTube playlist 166XXX in-app chat feature 167XXX in-app messaging 167


SUMMARY

1.0 SUMMARY

The global robo-advisor market continues to experience unabated growth. By the end of 2020 more than USD 4 trillion will be managed by robo-advisors and automated investment platforms worldwide. As this trend continues, huge numbers of start-ups and incumbents (established financial institutions offering robo advice) have recently entered the market for so-called robo advice. But despite this strong growth, the digital platforms of most robo-advisors have not developed to a point where they can meet the comprehensive needs of their investor and wealth management clients.

This report’s analysis and evaluation of 31 pure and hybrid robo-advisors from 11 countries show that on average, robo-advisors score only 61% of the maximum achievable benchmarking points. In areas like onboarding, financial planning, client coaching and retention, robos simply cannot live up to the required standards of digital wealth management. Only in the area of portfolio management does the report identify a satisfactory performance (81%). The report provides a strategic analysis of the current level of robo-advisor deployment and in-depth insights on the market’s trends and developments from the interviews MyPrivateBanking’s analysts conducted with executives of robo-advisors and industry experts.

The 31 robo-advisors featured in the report were purposely selected to achieve a balance in the following ways: global coverage, provision for different investor market segments, pure as opposed to hybrid robos, and standalone platforms and those provided by large institutions or third-party specialists. The offerings, strengths and weaknesses of each robo-advisor are individually profiled and scored for the quality of their onboarding, financial planning, portfolio management, client coaching and client retention and engagement features.

CLICK & INVEST, SCHWAB INTELLIGENT PORTFOLIOS AND INTELLIGENT ADVISORY AND SCALABLE CAPITAL TOP THE RANKING

MyPrivateBanking’s ranking of 31 robo-advisors from 11 countries awarded the highest scores to these three platforms:

■ Click & Invest (UK) – thanks to outstanding performance in the areas of portfolio management and client coaching (76.5% of maximum achievable points)

■ Schwab Intelligent Portfolios and Intelligent Advisory (US) – for the provision of complementary tools that ensure maximum capabilities in financial planning and impressive results in portfolio management and client retention and engagement (76.5%)

■ Scalable Capital (Germany) – one of the few players with convincing client coaching and a remarkable score in the area of client retention and engagement (76.3%)

The report offers the full ranking of the 31 robo-advisors, including a data appendix detailing the findings for each of the more than 50 benchmarking criteria applied. The results are further illustrated by 20 best practices of leading robo-advisors’ digital strategies/capabilities in areas such as onboarding tools, risk assessment, portfolio simulations, engaging and educational content, client retention and mobile features.


SUMMARY

This year, MyPrivateBanking observes that the robo-advisor landscape is diversifying, with firms focusing more on financial planning while others put more effort into traditional wealth management. Incumbent banks are now entering the market with their own solutions, turning up the heat for standalone robos and start-ups. The report identifies the various players’ strategic focuses and outlines the implications of this changing landscape for established banks, asset and wealth managers, and new providers of automated investment services.

In addition to the robos targeting the end consumer, MyPrivateBanking sees a growing trend of B2B robo-advisors, which is another disruptive force in the robo-advisor market. Software companies and standalone robos are licensing their technology to incumbents, allowing them to bring their automated advice offer to the market. The most prominent examples with their offerings and benefits are featured in this report and some of the most interesting B2B players and partnerships are identified.

Overall, these developments will lead to heated competition in the market and only those players with the highest level of excellence in digital capabilities will survive. This report offers a detailed and comprehensive look at leading robo-advisors and automated investment services worldwide, identifies the best, and derives highly valuable learning points. It analyzes what is necessary to succeed as a robo-advisor and how traditional financial services firms can react to the ever-growing robo-advisor challenge. And finally, it offers a series of recommendations for robo-advisors - standalone as well as those who are part of an established financial services provider – to ensure they will be on the winning side in the future.

THE ROBO-ADVISOR LANDSCAPE IS DIVERSIFYING


RANKING

2.0 RANKING

Ranking 2017


METHODOLOGY

3.0 METHODOLOGY

3.1 INTRODUCTION

In our first robo advisory benchmarking report in 2016, we focused primarily on robo-advisors’ task of onboarding new clients. This included an evaluation of the robo-advisors’ websites and published information about their fees and investment products and the underlying risk. While we still believe that this is a major field of robo advisory tools, we decided to expand our perspective to shed light on the whole process of the client journey with a robo-advisor, contributing to the emergence of new types of robo-advisors that blur the lines between pure and hybrid approaches and find new ways to automate certain processes and create completely new forms of robo advisory.

Therefore, our evaluation criteria, which are explained in more detail in section 3.3, aimed at assessing the following areas:

■ Client onboarding

■ Financial planning

■ Portfolio management

■ Client coaching

■ Client engagement & retention

■ Best practices

This approach enabled us to picture a highly interesting and very heterogeneous robo-advisor market, which will be presented in detail in chapter 5.

RESEARCH METHOD

After extensive online research on the developments and trends of the robo-advisor market during the past twelve months, our team developed a detailed set of criteria for pure robo-advisors and a slightly expanded one for hybrid robo-advisors, taking into account personal consultation and advice. In our convention, we classify a robo-advisor to be hybrid if clients have the possibility to contact a representative of that robo-advisor to get investment advice. If there is only customer support (advice on accounts, technical help, etc.), the tool is treated as a pure robo-advisor.

The evaluations were performed and re-checked independently by two different analysts to ensure objective results. In addition, all robo-advisors included were contacted to get additional information either from an interview or written responses to specific questions after an initial evaluation of publicly available material. The research and review process lasted from August to September 2017.

3.2 SELECTION OF ROBO-ADVISORS

In making our selection of robo-advisors, MyPrivateBanking aimed to reflect the following factors:

■ Global coverage. We wanted to include as many countries as possible while still doing justice to those jurisdictions where the robo-advisor market is most developed. This led to the following coverage of countries:

Country coverage of the robo-advisors included


METHODOLOGY

■ A balance of pure and hybrid robo-advisors. A key priority in deciding the scope of this report was to cover both pure robo-advisors and hybrid services, where the client journey includes automated elements and personal contact with qualified advisory staff as part of the process.

■ A balance of target market segments. The selection of robo-advisors for evaluation includes a broad spectrum of platforms in terms of the market segment that they seek to serve. These market segments range from new millennial investors beginning with very small accounts to highly paid professionals and HNWIs served by platforms with $100k minimum investment levels.

■ A balance of robo-advisors by age. The report seeks to compare robo-advisor pioneers such as Wealthfront and Betterment with newcomers such as Investec Click & Invest and UBS SmartWealth.

Chart: Types of robo-advisor included

The following table summarizes the 31 robo-advisors included, listed alphabetically:

3.3 EVALUATION CRITERIAThe underlying structure of our evaluation reflects the different stages of the client journey: onboarding, financial planning, portfolio management, client coaching, client engagement and retention.

In this way, we are able to compare each functional area across all robo-advisors, types of robo-advisor and region to identify the best and most client-friendly solutions of the various robos and regions.

3.4 PROFILE CONTENTS AND STRUCTURE

Each robo-advisor profile presented in chapter 6 includes the following parts:

■ Benchmarking score. The robo-advisors’ scores are compared with the overall score achieved by all players on average.

■ Key facts. The profiles contain a table with key facts such as the target market, assets under management, fee calculation, and regulatory status.

■ Robo-advisor assessment. Each robo-advisor included is profiled through an in-depth assessment of its performance in the different areas. The robo-advisor’s strengths and weaknesses are highlighted and a list of valuable recommendations is featured, too.

(... more in full report)



STRATEGY

4.0 STRATEGY

4.1 SUMMARY: GROW OR GO

4.2 MARKET PERCEPTION



4.3 A BOOMING MARKET: FIGURES AND NUMBERS


4.4 TYPES OF ROBO-ADVISORS: DIVERSITY RULES


4.5 B2B PROVIDERS

Increasing competition and the struggle to build sufficient assets under management forces some smaller players to think about expanding their services and products. Offering their software to incumbents is a very attractive opportunity for many FinTechs. In the following, we present some of the industry’s most interesting B2B offerings and partnerships.


4.6 SERVING IMPORTANT SUB-MARKETS

While many robo-advisors aim to provide investing to everyone and many players rely on standardized, passive investment products, there are a few that stand out through their special focus, targeting individual groups that are in no way niche markets that can be ignored.


4.7 KEY TRENDS

The following key trends will shape the robo advisory market in the next three to five years:

(...more in full report)

4.8 STRATEGIC RECOMMENDATIONS

Whether hybrid or pure, built in-house or outsourced, targeting retail or HNW investors, the broader masses or investors with speciific needs, they all face similar challenges in attracting potential clients and building up a strong client relationship. Robo-advisors should consider the following strategic recommendations to secure their place in the market.



SUMMARY OF FINDINGS

5.0 SUMMARY OF FINDINGS

Applying our comprehensive evaluation criteria to the 31 robo-advisors, we can derive interesting insights into the overall capacities and shortcomings of the leading platforms. The most striking outcomes are:


5.7 STRENGTHS AND WEAKNESSES AT A GLANCE

The heat map shows the performance of the 31 robo-advisors relative to their peers. Green indicates areas where the tools performed especially well, while yellow indicates an average performance and red reveals areas which need immediate improvement.


5.1 OVERALL RESULTS

5.2 CLIENT ONBOARDING

5.3 FINANCIAL PLANNING

5.4 PORTFOLIO MANAGEMENT

5.5 CLIENT COACHING

5.6 CLIENT RETENTION AND ENGAGEMENT








PROFILES & BEST PRACTICES

6.0 PROFILES

A comprehensive profile for each of the 31 robo-advisors with an in-depth evaluation of the onboarding, financial planning, portfolio management, client coaching and client retention and engagement offers from each robo-advisor and firm-specific recommendations. In a separate data appendix the findings are detailed for each of the 48 (pure rob-advisors) respectively 51 criteria (pure robo-advisors) applied.

(... more in full report pages 57 to 152)

7.0 BEST PRACTICES

Over the course of putting together this benchmarking report, we have come to the conclusion that there is still room for improvement in the robo-advising sector. This is particularly so in the areas of financial planning and client coaching, the latter being an area where most robo-advisors focus on publicly available informational and educational content but seem to overlook the delivery of personalized content for clients.

On the other hand, there have also been very commendable innovative efforts on the part of the surveyed robo-advisors. In the following pages, we will list the most outstanding practices among our sample of robos.

In the following pages, we will list the most 20 outstanding practices among our sample of robos.

7.1 ONBOARDING


7.2 FINANCIAL PLANNING


7.3 PORTFOLIO MONITORING


7.4 CLIENT COACHING


7.5 CLIENT ENGAGEMENT & RETENTION



AUTHORS

8.0 AUTHORS

Carmela Melone, Senior Analyst, specializes in research in the fields of social media for wealth management and mobile apps for financial advisors. Her specific areas of interest are in software benchmarking, channel strategy and online security. Prior to this, she worked at an exchange platform for intellectual property rights, responsible for the digital media marketing strategy. Carmela has a Master’s degree in Economics with specializations in Information Management and International Economics from the University of Hagen (Germany).

Carolina Cabrera John, Analyst, has a research focus on the topics of Big Data solutions for disruption and optimization in the wealth management and private banking sectors. Carolina holds a Lienciatura in Modern Languages from the University of the Andes in Venezuela and is currently pursuing an MA in American Studies at Humboldt University in Germany. She previously worked as an analyst for a market research SaaS company.

Anna Schneider, Analyst, specializes in the Asian wealth management landscape and its everchanging environment in the context of technological, economic and legal/regulatory disruptions. Her specific area of interest is the Chinese financial services sector, its recent developments, technological dynamic and implications for the worldwide wealth management industries. Anna holds a Bachelor’s degree in Asian Studies and Management.


DISCLAIMER

DISCLAIMER

IMPORTANT NOTICE AND DISCLAIMERS:

NO INVESTMENT ADVICE

This report is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. This report is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. It does not constitute a general or personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual investors. The price and value of securities referred to in this report will fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of all of the original capital invested in a security discussed in this report may occur. Certain transactions, including those involving futures, options, and other derivatives, give rise to substantial risk and are not suitable for all investors.

DISCLAIMERS

There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth in this report. MyPrivateBanking GmbH will not be liable to you or anyone else for any loss or injury resulting directly or indirectly from the use of the information contained in this report, caused in whole or in part by its negligence in compiling, interpreting, reporting or delivering the content in this report.

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