News broke Tuesday that RBC Wealth Management is collaborating with robo-advice provider FutureAdvisor on a new digital advice option, available on RBC’s website. Corporate Insight has long maintained that robo advisors like FutureAdvisor, with low-cost advice models and intuitive digital platforms, fill a niche market serving younger investors with less capital but a greater familiarity with digital products and services.
For a full-service brokerage like RBC, the partnership makes sense, helping RBC branch out to investors who might not yet have the funds to pay a flesh-and-blood financial advisor but who one day might. RBC’s press release announcing the move confirmed these intentions, stating, “As clients mature in their needs, and as the complexity of their investments increases, they will have the ability to seamlessly establish a larger relationship with RBC Wealth Management and a financial advisor.”
So what might a FutureAdvisor platform offered through RBC’s website look like? While the principals at both firms acknowledged that there are plenty of logistics to work out, it is fair to assume RBC will provide clients and advisors with some of FutureAdvisor’s key capabilities, which include:
Account aggregation: FutureAdvisor users can link accounts from banks, brokerages and 401(k) plans to get a complete assessment of their financial portfolio. Currently, 50% of the brokerages tracked by CI offer account aggregation, but RBC does not.
Asset allocation advice: Users can input details about their financial situation, including their planned retirement age, risk tolerance and household income, to receive a tailored asset allocation.
The firm then uses this information to provide an asset allocation overview, comparisons with the user’s current portfolio and specific buy, sell and hold recommendations.
Cash Analysis: FutureAdvisor tracks7accounts, determines how much they need to cover expenses and informs them if they have idle cash left over to invest.
In addition to these free tools for self-directed investors, FutureAdvisor offers investment management for a 0.5% annual fee.
In this partnership, RBC stands to update its product line with a relatively affordable robo-advice service built on FutureAdvisor’s platform and gain new technology for advisors and self-directed investors while positioning itself as a competitive option for emerging investors.