March 2017 – Account Opening & Onboarding

This is the inaugural report for Corporate Insight’s new subscription research service, Digital Advice Monitor, which will provide clients with an unprecedented view of the customer experience at the industry’s leading digital advice providers, along with our ongoing analysis of this rapidly evolving space.

Corporate Insight started tracking fintech firms in 2012 and published our first major study on investing- and personal-finance related startups the following year. That report—Next-Generation Investing: Online Startups and the Future of Financial Advice—evolved into an annual study on key digital advice players.

Digital Advice Monitor represents the logical progression of our Next-Generation Investing research. When we started tracking fintech investing firms, there were dozens of firms spread across eight major business models, like algorithm-based investment advice, online financial planning services and trade mimicking. Those startups sought to disrupt the financial services industry through their low-cost, highly-transparent and digitally-centric philosophies. In the years since, many of the startups we originally tracked were acquired or partnered with leading financial institutions. Many have also closed their doors. Through it all, one major model has triumphed—the automated online managed account, pioneered by firms like Betterment and Wealthfront—and many industry incumbents have introduced their own flavor of this service.

The mainstream adoption of the online managed account model may be the biggest development in wealth management since the Financial Crisis. Vanguard and Charles Schwab were the first of the industry incumbents to embrace this trend, with their 2015 launch of Personal Advisor Services and Intelligent Portfolios, respectively. They realized they could leverage technology to bring managed accounts and advice to the masses. The two achieved quick success, acquiring assets faster than their startup competitors and compelling other established players to take notice. Today, such industry leaders as Fidelity, E*TRADE, Capital One Advisors, Merrill Edge and TD Ameritrade offer their own proprietary digital advice offerings, with Morgan Stanley, UBS and Wells Fargo Advisors poised to follow suit this year.

With Digital Advice Monitor, Corporate Insight will begin tracking the digital advice offerings of the leading startups and industry incumbents using our own live, funded accounts. This first report documents and analyzes the entire account opening and onboarding process—including investor questionnaires, applications, account funding and online registration—for 13 leading automated managed account providers. In opening these accounts, we used a consistent investor persona. This will allow us to monitor and compare actual portfolio composition, management and performance across companies moving forward. The years ahead promise to see the sophistication of these online managed account services evolve, and Digital Advice Monitor will offer a front row view as new developments hit the market.