Banks are watching wealthy clients flirt with robo-advisors, and that's one reason the lenders are racing to release their own versions of the automated investing technology this year, according to a consultant.
Millennials and small investors aren't the only ones using robo-advisors, a group that includes pioneers Wealthfront Inc. and Betterment LLC and services provided by mutual-fund giants, said Kendra Thompson, an Accenture Plc managing director. At Charles Schwab Corp., about 15% of those in automated portfolios have at least $1 million at the company.
"It's real money moving," Thompson said in an interview. "You're seeing experimentation from people with much larger portfolios, where they're taking a portion of their money and putting them in these offerings to try them out."
Traditional brokerages including Morgan Stanley, Bank of America Corp. and Wells Fargo & Co. are under pressure to justify the fees they charge as the low-cost services gain acceptance. The banks, which collectively employ about 46,000 human advisors, will respond by developing tools based on artificial intelligence for their employees, as well as self-service channels for customers, Thompson said.
"Now that they're starting to see the money move, it's not taking very long for them to connect the dots and say, 'Whatever I offer for a fee better be better than what they're offering for almost nothing,"' Thompson said. Technology will "make advisors look smarter, better, stronger and more on top of the ball."
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