Big Banks (and investment firms) entering the robo-advising marketplace

According to a story first published by Reuters, Goldman Sachs is currently searching for developers to sit within the Goldman Sachs Asset Management Technology (GSAM-T) division. The position — and others like it — “[will] cover mass affluent market(s) by building an Automated Digital Advice Platform (Robo Advisor).”

The mass affluent market is key for big banks

Even with a record $1.38 trillion dollars in assets under management (AUM), Goldman Sachs is continuing to find new ways to expand its business. The current ‘prime target’ is the ‘mass affluent’ segment — those with less than $1.00 million dollars in investable assets.

The investment firm recently launched two products aimed at the ‘mass affluent’:

  • Marcus: personal loans (debt consol, credit card consol, online loans, unsecured loans) ranging from $3,500 to $30,000
  • GS Bank: complementary deposits with options for online savings and CDs

The company’s robo-advisor will likely take the form of its recent acquisition: Honest Dollar. Goldman acquired Honest Dollar last year for an undisclosed amount. Honest Dollar originally began with a goal of providing employees and owners of small-to-medium sized businesses access to affordable 401(k) alternatives. Unfortunately, Honest Dollar was unable to make a ‘splash’ in the crowded company-sponsored retirement pool.

Over the last year, Goldman Sachs has successfully spun Honest Dollar away from businesses (except the self-employed: Honest Dollar offers a SEP IRA) and into the personal retirement space. However, the robo-advising and personal retirement market is also crowded. Here are a few of the top startups in this space:

And now, some other major banks and investment firms are joining along or already in the market:

While the growing number of robo-advising platforms can be confusing, the competition is great for the consumer. Each new platform that enters the market can help drive management fees closer to zero — putting more money in your accounts for retirement.

I personally use Personal Captial (financial planning/budgeting) and Wealthfront (retirement accounts).


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