in consumer applications for financial services
Online financial advisers, or "robo-advisors," give self-directed investors a way to take more control over their portfolio. Alternative investment companies such as Betterment, Wealthfront and Motif can provide investors with a cost-efficient, hands-on method of trading and managing their funds, but many investors wonder if robo-advisors can actually take the place of a flesh-and-blood financial advisor. Remarkably, in many cases, the answer is "yes."
Robo-advisors offer some compelling benefits over traditional financial advising models, the most apparent of which are low investment minimums and modest fees. Many firms have minimums as low as $5 to $10, while others don't have any minimum investment requirements at all, decreasing the barrier to entry. Online investment advising platforms also usually only charge from 0.25 to 0.75 percent in management fees, compared to one percent or more with traditional advisors. There is even a trend toward free robo-advising services, with companies such as WiseBanyan pioneering this innovative approach. The costs of making trades and other account adjustments are often more transparent as well, with clearly defined, straightforward fee schedules. All of these aspects work together to maximize investors' ROI. In addition, customers gain access to many of the same investment analysis and planning tools that are used by professional financial advisors, which makes it possible for these customers to make knowledgeable financial decisions on a DIY basis. Some robo-advisor firms even offer educational materials, such as webinars, emails and other resources, to help their customers stay informed. The automated approach to financial advising is also more convenient and less time consuming than having to schedule face-to-face or over-the-phone meetings with a professional investment manager. The customer-centric nature of robo-advisors also leads to a more user-friendly interface than traditional financial advisor dashboards, making it easier for investors to take control of their portfolios.
No investment is guaranteed, and they all carry some measure of risk and volatility. Even the best performing investments are subject to the ebb and flow of the financial markets, and these effects can be unpredictable. However, robo-advisory firms have a few safeguards in place to hedge against those risks. First and foremost, robo-advisory firms are required to file as Registered Investment Advisors with the Securities and Exchange Commission. This means they are legally and professionally bound to certain fiduciary duties and other legal requirements, including specific disclosures regarding fee structures, trading and brokerage processes, and conflicts of interest. In addition, most of these platforms are backed by the Securities Investor Protection Corp, insuring up to $250,000 in assets. These protections make automated advisory companies just as safe as traditional financial advisors on the consumer-protection front. In addition, these platforms use elaborate algorithms to develop automated recommendations based on responses to a questionnaire that measures an investor's return objectives and tolerance for risk. The platform then recommends a mix of investments that are diversified across a number of asset classes that include:
This diversification provides some protection against risk and loss, as investments are spread over a variety of sectors. Online advising platforms also allow for a more systematic approach to the development and maintenance of a portfolio. Investors are not only able to establish more concrete objectives, but better adhere to the plans that they create. This encourages investors to ride out periodic market fluctuations and reduces the return-jeopardizing urge to buy and sell unnecessarily during financial storms. However, robo-advisors also offer enough flexibility that you can easily change your asset allocation if need be.
The robo-advisor approach is increasing in popularity, and this trend is projected to continue into the foreseeable future. Much of this ability to successfully compete with the long-standing big names in financial and investment management is the similarity between robo-advisors and traditional advisors. The very basis of the robo-advising is to provide a reliable selection of exchange-traded funds that investors can basically place on autopilot, establishing a passive revenue stream. This strategy is similar to the turnkey asset management and wrap account programs offered by conventional advisors. However, in many cases, the simplicity, cost-effectiveness and hands-on ability offered by automated online financial advising trumps the services offered by traditional investment advisory firms such as John Hancock and Vanguard, especially for tech-savvy Gen Xers and Millennials. This growing demand for do-it-yourself advising services have not gone unnoticed by traditional advisory companies. In response to the encroachment on their market share, some long-standing firms have launched their own versions of online advising, as with Charles Schwab's Intelligent Portfolios service. In other cases, financial management companies have formed alliances with robo-advisory platforms, such as the partnerships Fidelity Investments formed with Betterment and Learnvest. As the robo-advising method of financial management continues to expand, investors can expect to see additional offerings from conventional advisors and newly established automated advising platforms alike. While investors may be wary of this newcomer on the playing field, the advantages offered by robo-advising services have them poised to become staples of financial management. As with all financial matters, due diligence and careful consideration are key. However, those who choose to go the self-directed route may just find that financial advisors aren't the only effective way to invest.
Disclaimer: The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the suitability of any Even Financial product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional. Any information or statistical data sourced by Even Financial through hyperlinks, from third-party websites, are provided for informational purposes only. While Even Financial finds these sources to be accurate, it does not endorse or guarantee any third-party content
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Goldman Sachs-backed Even Financial, a digital matchmaker between banks and customers, just bought an insurance startup as life insurers are seeing policy applications boom
Even Financial has acquired LeapLife, a leading insurtech platform. The addition of LeapLife allows Even to immediately commence its insurance capabilities, aimed at simplifying and enhancing the way consumers search, compare, and get matched with insurance policies (LeapLife’s existing platform will continue to operate from leaplife.com). Business Insider wrote an article about it, interviewing our CEO and Founder Phill Rosen.
Even Financial Launches Insurance Offerings With Strategic Acquisition of LeapLife, a Leading Insurtech Platform
Pioneering B2B Fintech Expands its Industry-Leading Financial Services Monetization Platform to Help Insurance Carriers Find and Connect with Consumers New York, New York – April 22, 2020 – Even Financial (Even), the leading API for financial services search, acquisition, and monetization, announced today that it will be launching services for the insurance industry through the acquisition of LeapLife, an insurtech platform and digital life insurance agency. The addition of LeapLife allows Even to immediately commence its insurance capabilities, aimed at simplifying and enhancing the way consumers search, compare, and get matched with insurance policies (LeapLife’s existing platform will continue to operate from leaplife.com). Even and LeapLife now offer the only full end-to-end, multi-carrier digital life insurance marketplace experience. Over the coming weeks, Even will further integrate LeapLife’s technology and insurance offering into its industry-leading API, making turnkey insurance marketplaces programmatically available to a vast network of channel partners — when and where their consumers are most in need — while also enabling the company to expand to other insurance sectors, including homeowners, renters and auto insurance. This adds to Even’s peerless breadth of real-time, personalized financial product offers — an expansive suite that already includes loans, savings, credit cards, and more. “Even’s goal to evolve how financial institutions find and connect with consumers is not limited to loans or credit cards, but applicable to all financial products and services, including insurance,” said Phill Rosen, Even Founder and CEO. “Despite its importance, purchasing life insurance is often an overwhelming and inconvenient experience. With more than $600 billion in premiums paid each year, and only 6% of policies sold completely online, we see tremendous opportunities to help modernize the life insurance industry and offer solutions that solve challenges for consumers and carriers alike.” LeapLife is an established insurtech platform and digital life insurance agency that utilizes data science, deep underwriting knowledge, and proprietary technology, enabling consumers to apply for instant-decision life insurance policies with real-time quotes. LeapLife works with many best-in-class insurance carriers to offer consumers a seamless experience from beginning to end. This approach made Even and Leaplife a perfect match. As a digital insurance broker, LeapLife offers personalized life insurance recommendations based on a consumer’s unique needs. Paired with the Even API, which enables customer acquisition for insurance to be native and programmatic, consumers benefit from a more streamlined, transparent, and highly personalized experience when shopping for life insurance. Just as Even’s 2018 acquisition of Birch (the award-winning credit card rewards app) allowed the company to accelerate its expansion into credit cards, the addition of LeapLife will similarly put Even at the forefront of consumer insurance offerings. Charles Svirk of MassMutual Ventures, an investor in Even, said “The Even and LeapLife teams share a vision that the future of insurance acquisition will rely on the power of data-driven, programmatic distribution. We are thrilled to support them as their industry experience, impressive technology, and trusted relationships will help scale Even’s insurance offering and build partnerships to provide these critical innovations in insurance acquisition.” The Even API and platform solve significant, long-standing pain points in financial services acquisition by seamlessly connecting supply and demand. Even has continued its rapid growth trajectory in 2020, surpassing over $1.5 billion in credit issued through its API and expanding its platform to over 400 partners. Even has secured over $55 million in funding from major financial institutions, venture capital firms, and fintechs to back its goal to evolve the financial services acquisition ecosystem. About Even Financial Founded in 2015, Even Financial is a B2B fintech company that is transforming the way financial institutions find and connect with consumers. By seamlessly bridging financial institutions (including American Express, Goldman Sachs, and SoFi) and channel partners (such as TransUnion and The Penny Hoarder) via its industry-leading API, Even turns any consumer touchpoint into an ROI-driven, fully customizable, programmatic acquisition source for financial product offers with full compliance, security, and scale across loans, savings, credit cards, insurance, and more. Even is backed by leading financial services firms and VCs including American Express Ventures, Canaan Partners, Citi Ventures, F-Prime Capital (Fidelity), Greatpoint Ventures, Goldman Sachs, LendingClub, and MassMutual Ventures. Even is the leading search, comparison, and recommendation engine for financial services. Media Contact: firstname.lastname@example.org
Even CEO/Founder Phill Rosen quoted in Protocol Braintrust Newsletter
Our CEO and Founder Phillip Rosen was included in the most recent Protocol Braintrust newsletter along with answers from some thought leaders from Plaid, Slack, and DuckDuckGo!