A co-founder of Betterment
, the largest independent roboadvisor, is talking to fundsters this morning from the main stage at the 2017 ICI GMM
in Washington, D.C..
| Eli Broverman|
, former president of Betterment who stepped away
from his day-to-day role last month, is speaking on a panel alongside J.P. Morgan
U.S. private bank CEO Kelly Coffey
and Morgan Stanley Wealth Management
managing director and investment solutions group chief Ben Huneke
. Stuart Parker
, president of the freshly rebranded PGIM Investments
, is moderating the panel, on the "Future of Investment Advice."
The panelists opened the discussion with metrics about their business. Seven-year-old Betterment, Broverman says, has about 250,000 individual clients and more than 300 401(k) plan clients, and more than $8 billion in AUM. J.P. Morgan's 200-plus-year-old private bank, Coffey says, has about $1 trillion in client assets globally, including nearly $700 billion in the U.S. And Morgan Stanley Wealth Management, Huneke says, has about two million in clients and $2 trillion in client assets.
Broverman offers fundsters insight into how Betterment approaches the marketplace.
"Our target customer is the mass-affluent, $250,000 to $2.5 million of investable assets," Broverman says. "We're open to everyone but that's the customer we think about first ... when we're developing products."
"You can come to Betterment if you just have $10,000 and are just starting out," Broverman adds. "If you have $1 million there's really very few good options for you ... We can give you an incredible level of detail and attention to your account."
Betterment builds portfolios out of ETFs, though some clients bring over individual stocks or traditional mutual funds, and Betterment can also track and advise on investors' assets that aren't on the Betterment platform. As for incorporating other types of investment vehicles, he says they're open to alternatives and active strategies in ETF form down the line.
"I'd love to give my clients those options and that diversity," Broverman.
Broverman likens the future of wealth and asset management to the future of transporation and the rise of driverless cars.
"It's going to chaffeur you to your destination," Broverman says. "In the future you'll have a financial chaffeur."
"It's good to be trendy," Broverman quips, noting that Betterment is "growing very fast" and that many investors have trust issues when it comes to traditional financial services provides like big broker-dealers and mutual fund firms.
"The vast majority of people don't trust the financial institutions that they know, which is a shame," Broverman says.
Broverman also commented on the Dol rule, an hour after ICI chief Paul Schott Stevens
called for the rule to be rescinded or heavily changed.
"We're extremely supportive of that rule, I do hope it goes into effect," Broverman says. "We've been quite vocal to that effect."
"From a business perspective, we're agnostic," Broverman adds, saying that without the rule fiduciary status is a differentiator for Betterment.
Broverman also embraced a vision of the future that includes both roboadvisors and human advisors, not one or the other, for Betterment and the industry.
"How do we marry the best of both? What can software do great? What can humans do great?" Broverman said, pointing to online retailers that use physical locations as showcases and laboratories where they can "be in touch with [their] customers."
Huneke offered a similar perspective on the future of advice at Morgan Stanley. FAs, he says, will need to do more to address complicated interpersonal and interfamily questions for their clients.
"When you do that, the price is easier to protect," Huneke says. "Our advisors have a stiff challenge ahead of them to raise their game."
Morgan Stanley is building a roboadvisor, too.
"We want to serve clients across the board" and Huneke says. "We want to try to be omni-channel for clients and allow them to self-select" their level and type of service."
"That digital base is critical," Coffey says, while noting that J.P. Morgan's different level of clients will have a different look and feel experience in this increasingly digital future.
Broverman even took a moment to take some shots at a big competitor, another giant, but non-independent, roboadvisor: Charles Schwab
. He describes the Schwab roboadvisor service as "one of the worst and least transparent products" in the roboadvice business.
Stay tuned for more updates as this story develops.
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