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Hello, Investment World. Robo 3.0 is Here to Help You Win

Robo-advisor – It sounds cool, and a little menacing

Actually, there aren’t really robots. It’s just an edgy label for internet-based wealth management technology. In its infancy, Robo 1.0 was more R2-D2 than Terminator. Robo 2.0 evolved to be part Wall-E and part Warren Buffett. Robo 3.0 is where the smart money is heading.

Robo 1.0: Couch potato and passive indexing

Robo 1.0 came about with B2C first-movers like Betterment and Wealthfront. Betterment debuted at a TechCrunch event 6 years ago. Since then, the company has raised more than $200 million in equity and grown to manage $4 billion in assets. Wealthfront was actually first to the beachfront. Their latest buzz involves true robot-created AI and a flat-fee model designed to put old hedgies out to pasture.

Robo 2.0: “The Rise of The BlackRock Clones”

With any heat comes the next wave of bigger players scrambling for market share and RoboWorld Domination.

  • Schwab launched it’s free robo, Schwab Intelligent Portfolios, in March 2015. (We wish their launch would have featured a mechanical “Ask Robo-Chuck character.)
  • Later that year, BlackRock bought FutureAdvisor for $152 million. They cater to banks like BBVA Compass and RBC Wealth Management, as well as LPL, the largest independent broker-dealer in the U.S. and a major RIA account custodian.
  • Ellevest just launched with celebrity hedgie firepower and a mission to serve women investors. Their customers fill out a mad-lib style form that feeds a computer-generated portfolio-builder and allocates, according to Forbes, “across 21 ETFs.”


This is the couch potato investment persona we alluded to earlier. To be honest, having a computer match a consumer to a list of ETFs is simple, but not all that robo.  The bigger leap is coming from B2B FinTech products designed to be used by the RIAs and Wealth Management professionals themselves.

Robo 3.0: the friendly and approachable quant

Large hedge funds and institutions have access to some pretty neat tools, and most advisors don’t even know what they are missing. Until now,  these tools have only been available to the big boys willing to spend the cash to hire the analysts who know how to run these models. FinTech firms (like Cassia) democratize this knowledge–and advisors as well as clients are going to benefit.

Advisors who kept away from more complex strategies due to the records-keeping and compliance requirements will now be able to set risk limits, monitor correlations, and manage volatility with confidence. All of this can be done on the web through a stupidly intuitive interface.

Products like COPILOT from Cassia Research blur the line between manager and machine to deliver sophisticated, quant-based tools to RIAs. Such offerings will deliver levels of customization comparable to those offered by the most elite managed account programs today. Now THAT’s what a robot does well!



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Build your practice on the backs of 3 Nobel prizes — Prospect Theory, MPT, and GARCH.