suggested that North American robo-advisors need to manage between $11.3 and $21.5 billion just to break even.
Reust, who has been with Betterment for seven years and was previously its chief technology officer, stopped short of saying the robo would consider rolling out self-directed trading. But he said considerations were being made about developing more customized portfolios. "We expect the company to continue developing new, valuable financial products for this base," said Robert Le, senior fintech analyst with the data and analytics provider Pitchbook, suggesting that could mean adding credit products and insurance.
Meanwhile, Charles Schwab launched its robo-advisor five years ago. The firm's digital advisory platforms — its automated investing product, the premium version, and the RIA-focused robo service — together manage some $49 billion in assets as of September. "One of the most challenging things about robo-advice is the low cost combined with the low average client size. You need to achieve some significant scale, because the margins have to be very small," said David Goldstone, the manager of research and analytics for the research firm Backend Benchmarking, adding costs associated with customer acquisition costs have long "plagued" the wider robo-advisory market.