Start-up robo-advisors and large asset managers with digital offerings are competing to lure young, tech-savvy investors from smaller brokerages, and consultants expect firms like Amazon could soon join the race.
In fact, many investors who open robo accounts are driven by existing relationships with that firm, according to Corporate Insight project manager Sean McDermott.
Those firms have significant advantages over incumbent firms in their customer loyalty and “massive amounts of customer penetration,” Corporate Insight’s McDermott says.
“It’s a nightmare scenario for a lot of banks and even brokerages,” he says.
Corporate Insight is more skeptical that major tech players will enter the investment advice market, McDermott says. For now, it’s more likely that fintech companies already involved in payments will pivot to a robo-advice offering, he adds.