E-Trade enters the robo-advisory space
E-Trade plans to launch Adaptive Portfolio, a robo-advisory service which embraces the “set it and forget it” approach to investing. E-Trade customers will be offered a choice of ETF-only portfolios or a mix of ETFs and mutual funds for 30bps plus fund fees. The announcement comes as new rules in the US are expected to trigger a fresh rush of money to low-cost investments popularised by robo-platforms over the past five years. NY Times Dealbook suggests the news rules may also expedite a move towards robo start-ups forming partnerships with market incumbents.

E-Trade Financial, the brokerage firm that rose to prominence in the internet start-up boom of the late 1990s by peddling the ease of active online trading, is introducing a so-called robo-advisory service.

It will be the latest big financial company to chase the billions of dollars that have poured into automated investing in the last few years.

Unlike the self-directed investing that E-Trade Financial once championed, robo-investing, for the most part, embraces a “set it and forget it” approach, using exchange-traded funds and automatic portfolio updating. Popularized in the last five years by digital platforms like Betterment and Wealthfront and initially aimed at young professionals, the concept has shaken the traditional wealth management industry and forced nearly every major bank, fund company and brokerage firm to develop its own offering.

The new federal rules for companies that manage investor money are expected to encourage a rush to low-cost investments, something the robo advisers claim as their hallmark. The rules may also hasten formal partnerships between traditional banks and brokerage firms and the financial technology firms that have built robo-investing platforms. Robo advisers and other digital platforms had $53 billion of investor assets at the end of last year, according to Aite Group, up from $2 billion at the end of 2013.