Wells Fargo Mulls Robo-Advisory Offering

“For [robo-advisors], imitation is a serious threat to their continued existence. These firms have rolled out innovative ideas, but the existing financial services industry has ample resources available to replicate the robo-advisor business model,” said Frederick Pickering, research analyst at Cerulli, in a statement.

“Previously, many robo-advisors banked on the idea that financial firms were unwilling to duplicate their model for fear of upending their revenue. Wealth management firms responded to the innovator’s dilemma by building their own eRIA-inspired services,” Pickering explained.

Not only are the business models of robo-advisors, which Cerulli refers to as “eRIAs” in its research, relatively easy to duplicate, but firms like Schwab and Vanguard have the resources to offer more services at a lower cost.

When it comes to how the robo-offerings affect a firm’s ability to attract client assets, the jury is still out, as players rollout options by themselves or with strategic partners.

Fidelity — which formed a partnership with Betterment in October 2014 — has the greatest share of retail-investor assets among those with less than $5 million to invest, according to Hearts & Wallets: 10.9%.

Bank of America Merrill Lynch, including Merrill Edge, and Charles Schwab tied for the second- largest market share. Vanguard and Wells Fargo, including Wells Fargo Advisors, completed the top five.

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(Danielle Andrus and Emiy Zulz contributed to this report.)