Principal to shut down RobustWealth’s advisor-facing technology

Financial advisors using RobustWealth are now looking for a new technology provider.

Principal Financial Group, which acquired the digital advice startup in 2018, has informed customers that it made “a strategic business decision” to close down RobustWealth’s for-advisors business on September 6.

“This means that as of this date, we will no longer trade and rebalance your clients’ accounts on a discretionary basis,” according to an email obtained by Financial Planning. Clients will remain invested and advisors will have access to the platform to make transitions until that date.

The decision was made after Principal completed its acquisition of the remaining shares of RobustWealth on June 4, according to the message. “We are working with your custodian (Apex or TD Ameritrade, as applicable) to help identify potential options for you and your client accounts.”

A spokesperson for RobustWealth confirmed the letter and that several employees of the fintech company are being laid off.

"Principal is acquiring full ownership of RobustWealth to better integrate its technology, capabilities, and talent into the organization to drive value across the organization through innovation and the evolution of our digital advice and automated investment technologies," said a Principal spokesperson in an email. "As part of the transition, we’re no longer selling or supporting the advisor technology platform and are working closely with our clients impacted as we manage the wind-down."


RobustWealth was founded by Mike Kerins in 2015. The firm provides several of the functions of other white-labeled robo advisors, including automated investing and rebalancing, digital account opening and billing, as well as a digital document vault and client portal. The company also offers direct indexing capabilities to advisors and in February added goals-based financial planning tools to its client portal.

Principal’s acquisition in 2018 was part of a trend of large firms acquiring digital advice startups to improve distribution capabilities in the RIA, IBD and community banking channels.

Principal also saw the acquisition as laying the foundation for a direct-to-consumer robo advice product, according to InvestmentNews. However, then-chief investment officer Tim Dunbar insisted that RobustWealth would remain open architecture and look to expand the number of custodians it supported.

Instead, RobustWealth follows the fate of Learnvest, which was shut down by Northwestern Mutual three years after the insurer acquired the fintech for $250 million.

“Advisors repeatedly get hung out to dry by new fintech firms that can’t run an ice cream truck, let alone a business,” says Manish Khatta, president and chief investment officer of Potomac Fund Management. “Our industry is littered with fintech firms who have abandoned advisors like Oranj.”

Besides Betterment and Wealthfront, robo advice startups have struggled to remain independent. Motif Investing closed down in April, 2020, before selling pieces of its company to Charles Schwab, Folio Financial and Goldman Sachs Asset Management a month later (Goldman later acquired Folio Financial). Axos Financial bought WiseBanyan in 2019 and turned it into Axos Invest, and Hedgeable, one of the robo-advice pioneers, closed in 2018.

“Their only objective is to increase the user base and exit stage left,” Khatta says. “I would steer clear of any technology that doesn’t come from an advisor background or has investing chops.”

This is a trend likely to continue for B2B digital advisors, says Gavin Spitzner, president of Wealth Consulting Partners.

“There's too much supply and not enough demand, and through no fault of their own or due to a lack of technology prowess on the part of the robos, there hasn't been nearly the adoption predicted,” Spitzner says in an email.

According to the firm’s most recently filed form ADV, RobustWealth managed $856 million across nearly 7,000 client accounts. In 2019, 90 advisors were using the technology to service 1,600 client accounts, according to a Financial Planning report. The most recent T3 advisor software survey found RobustWealth had 0.19% of the market share for online portfolio management tools, down from 0.37% in the 2020 survey.

“Unless you're a large incumbent with a sizable clientele that can be shifted into a centralized hybrid digital advice solution, it's tough to drive adoption without a big marketing spend and the business-to-business players are left holding the bag,” Spitzner says.

This article originally appeared on Financial Planning.


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