Their success paved the way for fintech players that seek to reap higher profits by catering to the ultrawealthy, providing highly specialized services or even helping human wealth managers to confront the virtual-adviser threat.
One such newcomer is CircleBlack, launched in 2015 by John Michel, who previously headed BloombergBlack – an online wealth management experiment that Bloomberg scuttled three years ago – and held a senior post at Merrill Edge, Bank of America Merrill Lynch’s web-based advisory service.
CircleBlack also bills itself as a meeting place where wealth advisers and service providers such as tax and estate planners can mingle with its affluent user base.
Another online business offering institutional-level services to the private wealth industry is Tradelegs, which allows managers and advisers without specialized knowledge of derivatives to design and implement options overlay strategies.
“We empower wealth managers to create, understand and maintain strategies that are specific to their investment criteria, capital and risk constraints,” says co-founder and managing director Peter Hauser.
“Wealth managers can use Tradelegs to drive alpha and improve their risk-adjusted returns.” Custom-tailoring options strategies for client portfolios is away for advisers to stand out from the competition, Hauser contends.
Generation X and Millennial investors find many products and services via the Internet, and both groups tend to trust online providers over the handshake personal service that traditional advisers offer.