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. On Tuesday, E-Trade will introduce Adaptive Portfolio, a product line that uses a combination of stock and bond exchange-traded funds and actively managed mutual funds to create baskets that are weighted according to an investor’s risk preferences and investment goals. People entering through E-Trade’s website answer a series of questions and are sorted into one of six risk categories and corresponding model portfolios based on their answers. It is a bit of a twist on the offerings of rival firms, which only offer exchange-traded funds. E-Trade customers can pick whether they want pure E.T.F. portfolios or those with a mix of E.T.F.s and mutual funds. “We aim to kick-start a new phase in the automated investing evolution by offering investors access to more strategies to help them meet their goals,” said Lena Haas, E-Trade’s senior vice president of retirement, investing and savings. Just last month, UBS’s giant American wealth management division announced plans to use a robot to cater to its wealthy clients. Its 7,000 advisers are using technology developed by a San Francisco start-up, SigFig Wealth Management. SigFig’s technology is supposed to increase production for UBS advisers, taking over portfolio management duties so the advisers can spend more time talking to clients. SigFig is trying to court more banks and brokerage firms for similar alliances. UBS also made an equity investment in the company. Fidelity Investments is testing a digital product, Fidelity Go, and Charles Schwab introduced a robo product last year. Wells Fargo has updated WellsTrade, its self-directed online brokerage firm, with a fresh look and more features for online and mobile users while it develops plans for its own robo-investing product. At E-Trade, the account charge on Adaptive Portfolio is 0.3 percent of assets annually on a minimum investment of $10,000 plus fund fees. All of the portfolios have a position of 1 percent cash, and human advisers will be available for investors who want to communicate with one by telephone or instant message.
E - commerce plans to launch Adaptive investing , a robo - advisory platform which embraces the “ set it and forget it ” approach to investing . E - Trade customers will be offered a mix of ETF - only funds or a mix of equity 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 .