At a time when investors have at their fingertips a much broader swath of data with which to make decisions, it’s not clear whether the adviceand fees the big banks charge will be worth it to customers in years to come.
“The investors have become more sophisticated,” said Timothy Speiss, partner and chairman of EisnerAmper’s personal wealth advisors practice. “They have a lot more questions; they question fees. Investors are more astute now.”
As more of banks’ wealthy clients access data independently, some of their smaller, younger potential customers are being siphoned away by digital apps that allow users to transact without making a phone call or visiting a bank branch.
Robo-advisors, which have enjoyed growing popularity as millennials and others look to use low-fee, automated options for investing, have been on the rise in 2016. One of them, Betterment, reported that assets under management rose from $4.8 billion earlier this year to $5.3 billion, a company spokesman said this week. The company restricted trading in the post-Brexit sell-off, which may have prevented many retail investors from shooting themselves in the foot.
Morgan Stanley, which also saw year-over-year revenue in its wealth management division fall in the second quarter, has been boosting its presence in the digital end of the business. Earlier this year the bank added Naureen Hassan, a Charles Schwab veteran who ran that firm’s Intelligent Portfolios business, as chief digital officer for its wealth management business.
“Digital is far more than just robo,” Morgan Stanley CFO Jonathan Pruzan said on the bank’s earnings call last month. “We’ve been investing heavily in this area.”