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Online Retail Giant Threatens Advisors With Robo-Advisor Launch

February 2, 2018

Online retail giant Overstock.com has rolled out a robo-advice platform to its millions of monthly visitors, WealthManagement.com writes. The new service highlights the concerns of traditional wealth management firms over behemoths like Amazon entering their space, according to the web publication.

Overstock’s robo, available for $9.95 monthly, is part of the company’s FinanceHub platform, which also offers lending, credit cards and insurance, WealthManagement.com writes. Much like other automated advice platforms out there, Overstock’s robo uses an investor questionnaire to gauge preferences and reactions to certain market conditions to let clients select from several pre-established portfolios matching their risk profiles, according to the web publication.

The new robo is a result of a partnership with the RIA tZero Advisors using proprietary technology from fintech outfit FusionIQ for evaluating stocks and ETFs, WealthManagement.com writes.

The fact that a firm like Overstock can offer a robo-advisor suggests the underlying technology “is very replicable and anybody can do it,” Tim Welsh, founder of Nexus Strategy, tells the web publication.

“So the question becomes, who has the biggest user base?” he tells WealthManagement.com. The big fear is “that Amazon has hundreds of millions of customers, and advisors have 100.”

(Getty)

Overstock has around 40 million unique site visitors monthly, according to the publication.

Yet even established robos still have a hard time luring large accounts and their costs for client acquisition are high, Welsh tells the publication. This, he says, shows the vulnerability of pure robo pioneers like Wealthfront and Betterment compared to traditional advisors, who can offer their own robos by working with white-label products, according to InvestmentNews.

By Alex Padalka
  • To read the WealthManagement.com article cited in this story, click here.