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Technology > Investment Platforms > Robo-Advisors

Banks, Wealth Managers and Fintech Disruptors Vie to Create ‘Goldilocks’ Retail Product

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What You Need to Know

  • Only 55% of American are invested in the stock market.
  • Banks, wealth management firms and brokers are building better tools to democratize access to markets.
  • The winners of the race will be those that focus on educating and empowering clients to make smart decisions.

Retail investor interest in the stock market is surging as the Dow Jones Industrial Average and S&P 500 continue to book record closes.

Yet, for all the stories of millionaires next door and armchair speculators securing their retirement nest eggs with smart investments, just 55% of Americans are currently invested in the stock market.

For the rest, many of whom are younger people and minorities, the idea of setting up a retirement investment account or trying to time the market on the next GameStop frenzy is a  foreign notion.

Democratizing Investing

The nation’s retail banks, wealth management firms and online brokerage firms recognize this challenge and have been trying for decades to come up with the right formula to democratize investing for everyone.

Some, like Robinhood and Wealthfront, have targeted younger investors with a focus on easy access to trading or digital advice. Others, like Charles Schwab, Vanguard and Fidelity have skewed a little older with a focus on retirement savings. Meanwhile, retail banks have been aggressively expanding their advice channels, trying to become the hubs of their customers’ financial lives.

Taking a page from all three strategies, Goldman Sachs’ consumer banking brand recently stepped into the fray with the launch of its Marcus Invest offering.

By incorporating robo-investing tools pioneered in the fintech space with a suite of consumer-friendly offerings that have already been resonating with customers, Marcus has been making a compelling case.

Marcus entered the market in 2016 as an online bank with a focus on no-fee personal loans. Delivering a user-friendly digital experience backed by a well-respected institutional brand, Marcus quickly won fans.

By 2019, it had become the top-ranked brand in our Personal Loan Satisfaction Study and in 2020 it came in a close second. Our customer experience data showed strong performance on ease of self-service and an innovative brand image. It also had the highest Net Promoter Score in the category for two years running, which suggests strong customer advocacy.

Competitive Options

But Marcus is hardly alone. Chase also has been making a big push in this space, leveraging its JPMorgan brand equity to launch the new YouInvest solution, allowing customers to research, trade and manage their online brokerage accounts with direct connectivity to the Chase Mobile App.

This seamless integration between banking, investing and mobile has been a winner with customers. In fact, the Chase Mobile app was named the top wealth management app in overall customer satisfaction in our 2020 Wealth Management Mobile App Satisfaction Study.

Others, including Bank of America, Morgan Stanley, Edward Jones and Ally have been making moves in this space as well. The Morgan Stanley acquisition of E-Trade and Edward Jones’ announcement that they are pursuing a banking license are two of the clearest signals yet that the space is evolving quickly.

All of this speaks to the growing interest among financial brands to meld the best parts of the robo-advisor strategy deployed by fintechs, the focus on long-term wealth espoused by the brokerages and the online banking relationship model deployed by retail banks into an all-inclusive mobile app-based consumer offering.


There will be challenges along the way to creating the ultimate integrated wealth and banking nirvana, of course. One challenge is legacy brand perception. Even Marcus continues to carry some legacy reputational baggage when it comes to trust and brand attributes among mainstream consumers.

Similarly, by effectively outsourcing their credit card strategy through Apple, they may struggle as an all-inclusive brand. Others like Bank of America, Morgan Stanley and Edward Jones will face an uphill battle educating consumers that they are not just a bank or just a wealth management firm.

The blessing and the curse of these strong brands is that, while they do confer credibility, they also come with preconceived notions that can be hard to change.

Meanwhile, the fintech players who pioneered the robo-investing trend that all of these firms are leveraging, like Robinhood, Betterment and Wealthfront, still are struggling to reach their fullest potential.

Despite projections that robo-advisor-driven strategies would now account for over $1 trillion in assets, the real total is somewhere between $350 and $450 billion. Structural challenges, heavy competition and conflicts with legacy advisory models have all played a role in the slower-than-expected adoption of the technology.

Delivering Education a Must

The experience of the fintechs should serve as a cautionary tale for everyone else in the space that it’s going to take more than a better mousetrap to truly win a mass audience.

We have been tracking this trend toward consolidated financial services in our various studies and — so far — we have seen no discernable benefit to customer satisfaction among customers who use investing, banking and credit card services at the same institution.

Where we are seeing firms set themselves apart from the pack and build loyalty with customers is by consistently delivering education and guidance to empower investors to make smart — not just fast — decisions.

In the battle to become the robo-powered, app-driven hub of Americans’ financial lives, firms are going to need to look long and hard at what formula delivers that just-right set of solutions and services customers need to feel comfortable.

That may mean different things to different brands and different types of customers. The key to success will be identifying which is which and delivering consistently once that Goldilocks scenario is identified.

Craig Martin is managing director, wealth & lending intelligence at J.D. Power. Mike Foy is director, wealth intelligence at J.D. Power.


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