Grant Easterbrook is an analyst with Corporate Insight, a New York City research firm that provides competitive intelligence and user experience information to the country’s leading financial companies. He tracks about 130 online financial services startups, including sites that offer algorithm-based investment advice using account aggregation. What that means is that investors can type all their investment accounts into a site and receive an evaluation of each fund and advice on how to manage the portfolio.
“We’re not totally sold on the idea that these will replace personal financial advisers,” Easterbrook said. “High-net-worth portfolios, multi-goal planning, trusts, etc. … these are difficult to manage online.”
However, Easterbrook said the sites’ emphasis on fee transparency “probably will drive down the cost” of investment funds at a minimum.
Easterbrook’s newest report, released Tuesday, noted that “while many of these startups will inevitably fail, those that succeed could change the very nature of investing, particularly as Generations X and Y begin to accumulate wealth.”