Pioneered a decade ago by upstarts Wealthfront and Betterment, which used algorithms to pick low-cost investments suited for a customer’s risk appetite, robo-advisers could become a fixture in investing. After the initial push, mutual fund giants like Vanguard and Blackrock quickly released their own versions, and banks with big wealth management arms like Morgan Stanley and Bank of America followed suit. Now JP Morgan Chase is the latest to debut its own robo-advisor.
According to Investopedia, “Robo-advisors (also spelled robo-adviser or roboadvisor) are digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision. A typical robo-advisor collects information from clients about their financial situation and future goals through an online survey and then uses the data to offer advice and automatically invest client assets.”
After a year of fine-tuning, which included user trials at 27 branches in Brooklyn, JP Morgan Chase is released a digital investing service called You Invest Portfolios this week. For the cost of an annual fee of 0.35% of assets, or 35 basis points, J.P. Morgan will allocate users into an investment portfolio made up of the bank’s exchange traded funds, or ETFs.
That fee is roughly what competitors from Morgan Stanley to Wealthfront charge for similar services, but unlike most rivals, the bank is waiving fees for the underlying investments. The ETFs J.P. Morgan will offer will range in cost from about 2 to 50 basis points, and users will typically preserve an average of roughly 15 basis points in fees through the service, according to Jed Laskowitz, the J.P. Morgan executive who runs You Invest.
Currently there are a variety of options when it comes to roboadvisors, with online outfits like Ally Invest and Betterment offering lower account minimums than the bigger banks. Still, many customers find the convenience of a one-stop shop like JP Morgan a comfort.
“Customers can now bank, save, borrow and invest in one of our 5,000 branches as well as on the go,” says Thasunda Brown Duckett, CEO of consumer banking at Chase. “Our firm continues to invest in technology and experiences that help customers make the most of their money, so that they can makes the most of their lives.”
“We think we’re offering really great value at 35 basis points given the integration with the Chase experience and our rebating of all of the underlying ETF expenses,” Laskowitz said.
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