Wells Fargo Launches Robo-Advisor

Wells Fargo announced that it is launching Intuitive Investor, a robo-advisor tool built by technology vendor SigFig. According to Investment News:

The robo-advisor integrates with Wells Fargo's online and mobile banking services, meaning clients can open and fund a new Intuitive Investor account from their existing Wells Fargo app.  Intuitive Investor requires a minimum investment of $10,000 and will charge an annual 50-basis-point advisory fee. Wells Fargo customers who link the account to a premium checking account, Portfolio by Wells Fargo, will get a 10-basis-point discount.

Clients looking for additional advice can move their Intuitive Investor portfolios over to a full-service relationship with Wells Fargo Advisors. The tool is also available to the firm's human advisers as a means of engaging with new clients. [Wells Fargo] hopes that over time, Intuitive Investor can create a pipeline of new Gen X and millennial customers for Wells Fargo's full-service offerings and private bank.

Cornerstone believes this announcement is important beyond the obvious (i.e., expanding beyond human-delivered investment advice). One of the threats we see facing banks over the next few years is deposit displacement, which robo-advice tools will be a major cause of. Wells' move into robo-advice will help stem the tide of deposit displacement.

We do think, however, that the $10k minimum and 50 basis-point fee will deter many young, first-time investors from signing up, making us believe that these consumers are not the target market Wells is looking for.

How the Platform Economy Impacts Financial Services

Ron Shevlin
Director of Research
Cornerstone Advisors