Female-focused robo-advisor Ellevest just raised $9 million from Venus Williams and other key investors
This story was delivered to BI Intelligence "Fintech Briefing" subscribers. To learn more and subscribe, please click here.
The automated investment platform aimed at women closed its latest funding round after raising $9 million from investors including Venus Williams and Aspect Ventures, Finextra reports.
The platform's algorithm creates investment portfolios made up of exchange traded funds (ETFs) that are tailored to a user's preferences, risk tolerance, and goals — buying a home, retiring comfortably, or starting a business, for example. The algorithm takes into account the longer lifespans of women and their salary arcs, which are often different from those of men.
Ellevest was founded and is run by Sallie Krawcheck, who was previously CFO at Citigroup, and president of Global Wealth and Investment Management at BofA. It currently has $136,185 in assets under management across 40 accounts.
In an increasingly crowded robo-advisor market, firms that successfully differentiate will be likeliest to last. Legacy players continue to launch their own products, while startup robo-advisors are increasingly partnering with large firms to more easily acquire customers. For startup robo-advisors that want to remain independent, honing in on specific customer niches could be key to their success. Ellevest is not only targeting a niche market, but one that traditional financial models don't tend to accommodate well.
This could give it an even bigger advantage over competitors. By taking on specific market segments, robo-advisors may also be able to better compete with human advisors than one-size-fits-all products. That's because one reason human brokers remain in demand is because customers feel they better understand their specific needs. This could mean the less generic a product is, the more reassured customers will be that it has taken their needs into account.
Robo-advisors are threatening to upend the enormous global wealth management industry in several ways, and they are likely to arrive in full force within the next few years.
Sarah Kocianski, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on robo-advising that looks at the market for robo-advisory services, the drivers behind consumer adoption of robo-advising, why the robo-advisor market presents an opportunity to traditional wealth management firms, and how startup robo-advisors can succeed as massive legacy companies begin offering their own services.
Here are some of the key takeaways from the report:
- Large incumbent wealth managers won't lose out to startups like Betterment and Wealthfront. Instead, they are embracing the technology and launching their own products, which are scaling quickly.
- Consumers across all asset classes are receptive to robo-advisors — including the wealthy. 49% of this group would consider investing some of their assets using a robo-advisor.
- The majority of assets managed by robo-advisors will come from people who already have some investments. We estimate that the volume of assets that comes from people who don't currently invest will be less than 1% of the total by 2020.
- Startups are going to find it difficult to scale, and will need to differentiate their products to succeed. They are already doing this by providing white label services to wealth managers, and more customized stand alone solutions.
In full, the report:
- Provides a forecast for the volume of assets robo-advisors will manage by 2020.
- Highlights the factors that will drive the growth of robo-advisors
- Explains the different types of robo-advisor business model.
- Details the outlook for incumbents and startup robo-advisors in the wealth management industry.
To get your copy of this invaluable guide, choose one of these options:
- Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
- Purchase the report and download it immediately from our research store. >> BUY THE REPORT
The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of robo-advisors.