Online financial startups are starting to take root with investors. A report released Wednesday by Corporate Insight analyzed 11 online investment advice providers and found that combined they have more than $11.5 billion under management or advisement.
The majority of that is under advisement, the report found, as those firms reported they provide paid advice for $9 billion in client assets. Online startups directly manage $2.6 billion in client assets, according to the report.
Data for the report was pulled from publicly available information. Corporate Insight also conducted interviews with executives at several firms.
Corporate Insight tracks more than 200 online financial services startups, but this analysis only included data from the 11 best-known firms: Assetbuilder, Betterment, Covestor, Financial Guard, FutureAdvisor, Jemstep, MarketRiders, Personal Capital, RebalanceIRA, SigFig and Wealthfront. The services those firms offer include algorithm-based advice and advice from real advisors who meet with clients virtually.
Those firms are among the oldest and largest of the startups Corporate Insight tracks, according to Grant Easterbrook, an analyst for Corporate Insight. Considering how new the services are though, “old” is relative.
“With a few exceptions — Covestor, MarketRiders are a little older — most of these services have gone live in the last year or two. Overall, they’re pretty young,” he said.
“The basic idea here is they’re trying to build a very scalable model. They want to make it very low-cost at each new customer,” Easterbrook said. They can also onboard clients quickly with online tools.