The largest independent robo-adviser is adding human advice to the automated technology it’s championed for years.

Share story

The largest independent robo-adviser is adding human advice to the automated technology it’s championed for years.

Betterment will begin offering recommendations from experts alongside its computer-driven service, which aims to build investment portfolios for a fraction of the fees charged by traditional brokers. The human touch will cost 50 basis points of clients’ assets for a “premium” plan allowing unlimited advice from financial planners, roughly double the charge for the company’s digital service.

The move marks an evolution for robo-advisers as they attempt to win high net worth individuals and compete against traditional asset managers. “Over the last couple of years, as our client base has gotten older and wealthier, we’ve had a call for handling more advanced situations,” said Alex Benke, Betterment’s head of financial advice and planning. “We’re meeting that need now with the ability to talk to a certified financial planning professional or another licensed expert.”

Betterment and other automated investment-service providers have seen substantial growth over the past two years as they’ve lured customers looking for low-cost advice. Established firms like Vanguard Group have elbowed in, offering low-fee automated plans to attract younger investors and maintain a huge lead in assets under management.

Betterment’s announcement is part of a move to close that gap and boost fee income. While Betterment will maintain its $0 account minimum for digital-only customers, clients will need a minimum $100,000 in assets for a plan that costs 40 basis points and gives access to investment professionals once a year. The 50-basis point plan will provide unlimited access and require a $250,000 minimum balance. There is no fee charged on assets above $2 million.

Ritholtz Wealth Management CEO Josh Brown, said eventually all robo-advisers will see this convergence. “Automated allocation software is just a tool, employed by human firms, like email,” he said. “We won’t be drawing any distinction between advisers and robo-advisers in the end.”