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.

Ron Shevlin
Director of Research
Cornerstone Advisors