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Some Robo-Investment Surprises

Last update on: Mar 14 2020

Not all of the robo-fundo robo-investment programs are the same, and you might be surprised at some of the differences. Also, an independent program that’s been purchased by one of the major financial firms could change in ways you don’t expect, according to this article. It says a fund might not be allowed in the program unless the fund sponsor pays the program sponsor. While the major promises of robo-investing is very low expenses and objective investment advice, that might not always be the case.

The practice is known as revenue-sharing, or paying for shelf space. It includes sponsoring conferences for bank employees at luxury resorts and lavishing top brokers with gifts and entertainment. Vanguard Group, whose popular low-cost ETFs are the main funds used by Wealthfront and Betterment, refuses to make such payments. Morgan Stanley in May dropped Vanguard from the lineup of funds its advisers offer; it said at the time it was weeding out funds that were less popular with its clients. Many other asset managers, including BlackRock Inc. and Legg Mason Inc., choose to pay.

 

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