Tuesday, June 6, 2017

TIAA joins list of robo-advisers as Wall Street takes aims at Millennials

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The Wall Street trend of using financially savvy robots to help investors build portfolios online with a few mouse clicks has another convert on Wall Street.

TIAA is the latest entrant into the robo-advisery business, which lets investors create a professionally managed personal account online in minutes without the need for human intervention. As technology becomes a bigger part of everyday life and more investors manage their money digitally, there’s a push by financial firms to provide online investing solutions, which has led to a proliferation of robo-driven services.

Part of the competitive allure for Wall Street firms is to appeal to Millennials, now the nation’s largest generation. Nearly six in 10 Millennials said they were interested in robo-advisers, a BlackRock survey found. The business of offering tech-savvy people the ability to build financial plans and fund portfolios has become highly competitive. Firms ranging from mutual fund giant Fidelity to low-cost brokerages like Charles Schwab to upstart digital companies like Wealthfront and Betterment now provide individual investors with low-cost, easy-to-use robo advisers.

“The robo-adviser has officially gone mainstream,” NerdWallet analyst Arielle O’Shea noted.

Like the other services, TIAA’s Personal Portfolio allows a user to go online, answer a few questions, such as their age, investment goals, time horizon and their feelings about risk. It then recommends a computer-generated portfolio.

Some robo services build investment portfolios using only “passive” funds, such as exchanged-traded funds, or ETFs, that track stock indexes like the Standard & Poor’s 500. Others use “active” funds run by portfolio managers whose goal is to post bigger returns than the market. Some offer a mix of passive and active strategies. Niche offerings like OpenInvest  and GrowInvest focus solely on “impact” investing, or buying funds investing in companies with good grades when it comes to the environment, social causes and corporate governance.

TIAA said its new robo service will give investors the opportunity to gain exposure to all three of those types of investments.

Source: USA Today

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June 06, 2017 at 09:21PM

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