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Sanford Bernstein's new research note asked "How big a threat are the new batch of robo-advisors to traditional active fund managers?" Are they, an "innocuous robot like R2-D2 or are they Terminator?" They checked out both Nutmeg and MoneyFarm and whilst impressed found it hard to believe that big industry incumbents won't break through what they see as low-barriers to entry.
"The robo-advice approach looks to have a rosy future, though not necessarily the current robo-advisors themselves," the team, led by Inigo Fraser-Jenkins, write in the note. "Barriers to entry for the actual robo part are very low we think. So this may well be exploited by more established finance (or tech) brands with a broad distribution capability," they write, adding that a number of large asset managers like Vanguard Group, Northwestern Mutual Co. and Charles Schwab Co. have already jumped into the space. Tech giants Alphabet Inc. and Facebook Inc. have also taken a look at the asset management industry in recent years.
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