Articles related to software development
Monday June 19th a beautiful sunny day in IT-friendly Wroclaw, tech start-ups and cryptocurrency enthusiast gather together at IT corner Tech meetup, sponsored by Empirica.
The event was planned to focus on key areas of current trends in Blockchain and Ethereum.
The event began with Mr Wojciech Rokosz, Ardeo CEO presentation. The session was dedicated to introduction to the economics of token. Explaining the new changes and updates we are and we will face in our economy with this huge entrance of virtual currencies.
The event later carried on with Mr Marek Kotewicz on introduction to Blockchain, Bitcoin and Ethereum. The session was summarizing the differences between Bitcoin and Ethereum.
The third and last part of the event was conducted with Mr Tomek Drwga, Blockchain meetup organizer, diving deeper into smart contracts and programming ( introduction to Solidity) for Ethereum.
The event ended with open discussion between the audience and speakers, and visitors were served with beverages.
Empirica proudly presented the technology for Robo-Advisors; How to build great software behind your Fintech service at Cloud Expo 2017 in Manhattan, New York.
The event was from 6th to 8th of June 2017 at Javits Center in New York City, where panels were hosting star speakers from Silicon Valley to Wall Street. The event was focused on Fintech, Cloud Computing, Artificial Intelligence, Cognitive Computing and other hot technology fields and topics. There was a tremendous turn out to Cloud Expo 2017. The event was honored to host speakers and audiences from around the world. Global leaders in technology such as Amazon Web Services, IBM cloud, DEll EMC and financial industry giants like Accenture and Deloitte, together with successful companies and brands around the world , brought the latest trends of technology in one place.
Mr Michal Rozanski, Empirica CEO and board member of EARP Integration used his 35 minutes on stage, introducing new technologies in Robo-Advisory arena. Mr Rozanski, show cased Empirica’s newly built Robo-Advisory platform to express the importance of fine technology in automated wealth management solutions. The speech carried on with Mr Rozanski, explaining the maturity Empirica gained facing challenges during development of a modern Robo-Advisory platform from scratch. The session was concluded with Mr Rozanski give away on informing the essential factors of developing a software behind a Fintech service, and answering the ‘HOW’ for those intending to build such applications.
Moreover, visitors and audiences could meet Empirica representatives at their dedicated booth at Cloud Expo, where they could ask and discuss deeper and in details about the technology behind Fintech services as well as the technology behind Robo-Advisory.
Empirica took part in the biggest FinTech Event in Europe with almost 2500 attendees from 44 countries and 145 exhibitors & partners, taking place in London this December (6th & 7th). FinTech Connect Live combined a large scale expo, with 180 experts speaking in 120 dedicated conferences focusing on different FinTech subsectors, like WealthTech, InsurTech or PayTech with strategic discussion based sessions, keynote presentations, product demos and interactive workshops.
Empirica proudly presented own white label solutions like an intelligent Robo-Advisory Platform, Algorithmic Trading Engine and FinTech Software Framework as well as development services among both tech giants and brand new start ups with sophisticated niche product offerings. Anyone interested in speaking with Empirica about building the bespoke FinTech solution behind own service could meet our team at the stand. We shared experiences gained for over 6 years of developing solutions for financial institutions and FinTech companies, including robo-advisors. We ran many interesting conversations about new market trends and needs, specially in wealth management space. Our Robo-Advisory Platform received huge attention from asset managers and investment companies participating in the event.
Empirica presented also company showcase demo at the showcase theater. While presenting our experiences, CEO of Empirica illustrated the most important issues of building tailored FinTech software.
During the conference there were many interesting presentations and panel discussions about future trends of robo advice and advancements in the fields of InvesTech and WealthTech and other FinTech sessions like: the future of banking, blockchain rising, opportunities and risks in the data economy in FinTech, crowdfunding & P2P lending.
Thank you to all the participants who visited us at our stand or watched our showcase demo presentation!
See our Robo Advisor Software:
By Michal Rozanski, CEO at Empirica.
In the very centre of Canary Wharf, London’s financial district, in a brand new EY building, a very interesting FinTech conference took place – FinTech Forum on Tour. The invitation-only conference targeted the most interesting startups from the investment area (InvestTech) from mainland Europe. The event had representative stakeholders from the entire financial ecosystem. As Efi Pylarinou noted – the regulator, the incumbents, the insurgents, and investors, were all represented.
Empirica was invited to present its flagship product – Algorithmic Trading Platform, which is a tool professional investors use for building, testing and executing of algorithmic strategies. However, it was amazing to see what is happening in other areas of the investment industry. There were a lot of interesting presentations of companies transforming the FinTech industry in the areas of asset and wealth management, social trading and analytics.
The conference was opened with a keynote speech by Anna Wallace from FCA. Anna talked about the mission of FCA’s Innovation Hub; that is to promote innovation and competition in the financial technology field and to ensure that rules and regulations are respected. Whilst listening to Anna it became clear to me what the real advantage of London holds in the race to become the global FinTech capital – London has Wall Street, Silicon Valley and the Government in one place – and what’s most important, they cooperate trying to push things forward in one direction.
A short look at the companies presenting themselves at the event leads to the conclusion that the hottest sector of FinTech right now is robo-advisory. It’s so hot, that one of the panellists noted it’s getting harder and harder to differentiate for robo-advisory startups. On FinTech on Tour this sector was represented by AdviseOnly from Italy, In2experience, Niiio, Vaamo and Fincite – all from Germany. Ralf Heim from Fincite presented an interesting toolkit ‘algo as a service’ and white label robo-advisory solutions. Marko Modsching from niiio revealed the motivation of retail customers, that “they do not want to be rich, they do not want to be poor”. Scalable Capital stressed the role of risk management in its offering of robo advisory services.
Social analysis/Sentiment/ Big Data
The social or sentiment analysis area, keeps growing and gains traction. Every day there’s more data and more trust in the results of backtesting as that data builds up over the years. The social media space is gaining ground. Investment funds as well as FinTech startups are finding new ways to use sentiment data for trading. And, it’s inseparably related with the analysis of huge amounts of data, so technically the systems behind it? are not trivial.
Anders Bally gave an interesting presentation about how to deal with sentiment data and showed how his company Sentifi is identifying and ranking financial market influencers in social channels, and what they discuss.
Sentitrade showed its sentiment engine for opinion mining that is using proprietary sentiment indicator and trend reversal signals. Sentitrade is concentrated on German-speaking markets.
From the area of asset management an interesting pitch was given by Cashboard, offering alternative asset classes and preparing now for a huge TV marketing campaign . StockPluse showed how to combine information derived from social networks and base investment decisions on the overall sentiment. United Signals allows for social investing by making it possible to trade by copying transactions of chosen trading gurus with a proven track record, all in an automated way. And, finally BondIT, an Israeli company, presented tools for fixed income portfolio construction, optimization and rebalancing with use of algorithms.
Bitcoin and Blockchain
An interesting remark was given by one of the panelist: ‘we have nearly scratched the surface for what blockchain technology can be applied to in financial industry’. Looking at the latest news reports that are saying that big financial institutions are heavily investing in blockchain startups and their own research in this field, there is definitely something in it.
A company from this sector of FinTech – Crypto Facilities, represented by its CEO Timo Schaefer, showed the functionalities of its bitcoin derivatives trading platform.
Hervé Bonazzi, CEO of Scaled Risk, presented its technologically advanced Big Data platform for financial institutions for risk management, compliance, analytics and fraud detection. Using Hadoop under the hood and low latency processing. Ambitious as it sounds.
Analysis of financial data for company valuations, Valutico presented a tool that’s using big data, AI and swarm intelligence. Dorothee Fuhrmann from Prophis Technologies (UK) presented a generic tool for financial institutions to derive value and insights from data, interestingly describing indirect exposures and a hidden transmission mechanism.
Stephen Dubois showed what Xignite (US) has to offer to financial institutions and other FinTech startups in the area of real-time and historical data that is stored in the cloud and accessible by proprietary API.
Qumram, in an energetic presentation delivered by Mathias Wegmueller, described technology for recording online sessions on web, mobile and social channels, allowing for the analysis of user behaviour and strengthening internal security policy.
London is the place to be for FinTech startups. No city in Europe gives such possibilities. Tax deductions for investors. Direct help from the UK regulator FCA. Great choice of incubators and bootcamps for startups. No place gives such a kick. Maybe Silicon Valley is the best place for finding investor for a startup, maybe the Wall Street is the centre of the financial world, but London is the place that combines both the tech and the finance. It has a real chance of becoming the FinTech capital of the world.
The people responsible for creating both a great and professional atmosphere at the event were Samarth Shekhar and Michael Mellinghoff. Michael was a great mentor of mine who transformed my pitch from a long and quite boring list of functionalities of our product to something that was bearable for the audience. Michael let me thank you once more for the time and energy you have devoted to Empirica’s pitch!
And because the FinTech scene in our region is not well organized yet, I sincerely advise all FinTech startups from Central and Eastern Europe to attend cyclic events of FinTech Forum in Frankfurt organized by Techfluence professionals!
Read about our Lessons learned from FinTech software projects.
Ethereum has become a top target for hackers.
The promising cryptocurrency that’s also a stage for decentralized software has dropped in value during the last six months (although it also had a serious drop in price in the past couple of months). But hacker attacks and theft of ether are very commonplace, and the last one is one of the worst so far.
An unknown hacker or a bunch of hackers exploited a vulnerability in the manner by that Parity, an Ethereum wallet, executed multi-sig wallets, stealing some 153,000 value of ether, which was valued around $32 million in the time of theft.
According to a security alert on the Parity blog dated July 19, the vulnerability was fixed, but “any user with resources in a multi-sig pocket made in Parity Wallet prior to 19/07/17 23:14:56 CEST,” was exposed to ether theft.
The thieving has indeed happened and it could be seen on Ethereum’s blockchain here. And additional funds were stolen from other companies such as Edgeless Casino and Aeternity.
A multi-sig wallet is a wallet which needs more than one touch for a task to be performed on its own contents. Users who had regular wallets on Parity were not in danger (incidentally, the author of this text has until recently held some ether at a Parity wallet, but maybe not a multi-sig one).
What makes this theft particularly troublesome is that Parity is among the most trusted pockets at the company. The business was founded by Gavin Wood, who’s also a co-founder of Ethereum and has composed the first implementation of Ethereum back in 2014. What’s more, it seems that no quantity of caution on the consumers’ side could have prevented the theft.
Those transactions can be viewed here. The group has promised to return the capital to their owners once the vulnerability is fixed.
His isn’t even the first ether theft this week. On Tuesday, a first coin offering (ICO) of an Ethereum-based startup called CoinDash went south as hackers managed to change the wallet speech on the project’s webpage, siphoning away more than $10 million value of ether.
To repair the harm, Ethereum’s management decided to create a tough fork in the software, undoing the theft but also splitting Ethereum to two separate cryptocoins: Ethereum and (today far less precious) Ethereum Classic.
Ethereum is a system and programming language which makes it possible for any developer to construct and release next-generation decentralized software. In summary: Ethereum is your internet, with no web servers. Ethereum may be used to codify, decentralize, protected and exchange just about anything: voting, domains, financial markets, crowdfunding, business governance, contracts and arrangements of most form, intellectual property, as well as wise property as a result of hardware integration.
By Michal Rozanski, CEO at Empirica.
Reading news about fintech we regularly see the big money inflow to new companies with a lot of potentially breakthrough ideas. But aside from the hype from the business side, there are sophisticated technical projects going on underneath. And for new fintech ideas to be successful, these projects have to end with the delivery of great software systems that scale and last. Because we have been building these kind of systems for the fintech area for over 5 years we want to share a bit of our experience.
“Software is eating the world”. I believe these words by Marc Andreessen. And now the time has come for finance, as technology is transforming every corner of the financial sector. Algorithmic trading, which is our speciality, is a great example. Other examples include lending, payments, personal finance, crowdfunding, consumer banking and retail investments. Every part of the finance industry is experiencing rapid changes triggered by companies that propose new services with heavy use of software.
The best evidence that something is happening somewhere is to see where the money goes. Investments in fintech companies globally grew to $12 billion last year, which is a three times increase comparing to 2013, and five times during the last five years, according to the research reports by CBInsights.
If fintech relies on software, and there is so much money flowing into fintech projects, what should be looked for when making a fintech software project? Our outsourcing software projects for the fintech industry as well as building our own algorithmic trading platform has taught us a lot. Now we want to share our lessons learned from these projects.
1. The process – be agile.
Agile methodology is the essence of how software projects should be made. Short iterations. Frequent deliveries. Fast and constant feedback from users. Having a working product from early iterations, gives you the best understanding of where you are now, and where you should go.
It doesn’t matter if you outsource the team or build everything in-house; if your team is local or remote. Agile methodologies like Scrum or Kanban will help you build better software, lower the overall risk of the project and will help you show the business value sooner.
2. The team – hire the best.
A few words about productivity in software industry. The citation is from my favourite article by Robert Smallshire ‘Predictive Models of Development Teams and the Systems They Build’ : ‘… we know that on a small 10 000 line code base, the least productive developer will produce about 2000 lines of debugged and working code in a year, the most productive developer will produce about 29 000 lines of code in a year, and the typical (or average) developer will produce about 3200 lines of code in a year. Notice that the distribution is highly skewed toward the low productivity end, and the multiple between the typical and most productive developers corresponds to the fabled 10x programmer.’.
I don’t care what people say about lines of code as a metric of productivity. That’s only used here for illustration.
The skills of the people may not be that important when you are building relatively simple portals with some basic backend functionality. Or mobile apps. But if your business relies on sophisticated software for financial transactions processing, then the technical skills of those who build it make all the difference.
And this is the answer to the unasked question why we in Empirica are hiring only best developers.
We the tech founders tend to forget how important it is to have not only best developers but also the best specialists in the area which we want to market our product. If you are building an algo trading platform, you need quants. If you are building banking omnichannel system, you need bankers. Besides, especially in B2B world, you need someone who will speak to your customers in their language. Otherwise, your sales will suck.
And finally, unless you hire a subcontractor experienced in your industry, your developers will not understand the nuances of your area of finance.
3. The product – outsource or build in-house?
If you are seriously considering building a new team in-house, please read the points about performance and quality, and ask yourself the question – ‘Can I hire people who are able to build systems on required performance and stability levels?’. And these auxiliary questions – can you hire developers who really understand multithreading? Are you able to really check their abilities, hire them, and keep them with you? If yes, then you have a chance. If not, better go outsource.
And when deciding on outsourcing – do not outsource just to any IT company hoping they will take care. Find a company that makes systems similar to what you intend to build. Similar not only from a technical side but also from a business side.
Can outsourcing be made remotely without an unnecessary threat to the project? It depends on a few variables, but yes. Firstly, the skills mentioned above are crucial; not the place where people sleep. Secondly, there are many tools to help you make remote work as smooth as local work. Slack, trello, github, daily standups on Skype. Use it. Thirdly, find a team with proven experience in remote agile projects. And finally – the product owner will be the most important position for you to cover internally.
And one remark about a hidden cost of in-house development, inseparably related to the IT industry – staff turnover costs. Depending on the source of research, turnover rates for software developers are estimated at 25% to even 38%. That means that when constructing your in-house team, every fourth or even every third developer will not be with you in a year from now. Finding a good developer – takes months. Teaching a new developer and getting up to speed – another few months. When deciding on outsourcing, you are also outsourcing the cost and stress of staff turnover.
4. System’s performance.
For many fintech areas system’s performance is crucial. Not for all, but when it is important, it is really important. If you are building a lending portal, performance isn’t as crucial. Your customers are happy if they get a loan in a few days or weeks, so it doesn’t matter if their application is processed in 2 seconds or in 2 minutes. If you are building an algo trading operations or payments processing service, you measure time in milliseconds at best, but maybe even in nanoseconds. And then systems performance becomes a key input to the product map.
95% of developers don’t know how to program with performance in mind, because 95% of software projects don’t require these skills. Skills of thinking where bytes of memory go, when they will be cleaned up, which structure is more efficient for this kind of operation on this type of object. Or the nightmare of IT students – multithreading. I can count on my hands as to how many people I know who truly understand this topic.
5. Stability, quality and level of service.
Finance is all about the trust. And software in fintech usually processes financial transactions in someway.
Technology may change. Access channels may change. You may not have the word ‘bank’ in your company name, but you must have its level of service. No one in the world would allow someone to play with their money. Allowing the risk of technical failure may put you out of business. You don’t want to spare on technology. In the fintech sector there is no room for error.
You don’t achieve quality by putting 3 testers behind each developer. You achieve quality with processes of product development. And that’s what the next point is about.
6. The Dev Ops
The core idea behind DevOps is that the team is responsible for all the processes behind the development and continuous integration of the product. And it’s clear that agile processes and good development practices need frequent integrations. Non-functional requirements (stability and performance) need a lot of testing. All of this is an extra burden, requiring frequent builds and a lot of deployments on development and test machines. On top of that there are many functional requirements that need to be fulfilled and once built, kept tested and running.
On many larger projects the team is split into developers, testers, release managers and system administrators working in separate rooms. From a process perspective this is an unnecessary overhead. The good news is that this is more the bank’s way of doing business, rarely the fintech way. This separation of roles creates an artificial border when functionalities are complete from the developers’ point of view and when they are really done – tested, integrated, released, stable, ready for production. By putting all responsibilities in the hands of the project team you can achieve similar reliability and availability, with a faster time to the market. The team also communicates better and can focus its energy on the core business, rather than administration and firefighting.
There is a lot of savings in time and cost in automation. And there are a lot of things that can be automated. Our DevOps processes have matured with our product, and now they are our most precious assets.
7. The technology.
The range of technologies applied for fintech software projects can be as wide as for any other industry. What technology makes best fit for the project depends, well, on the project. Some projects are really simple such as mobile or web application without complicated backend logic behind the system. So here technology will not be a challenge. Generally speaking, fintech projects can be some of the most challenging projects in the world. Here technologies applied can be the difference between success and failure. Need to process 10K transaction per second with a mean latency under 1/10th ms. You will need a proven technology, probably need to resign from standard application servers, and write a lot of stuff from scratch, to control the latency on every level of critical path.
Mobile, web, desktop? This is more of a business decision than technical. Some say the desktop is dead. Not in trading. If you sit whole day in front of the computer and you need to refer to more than one monitor, forget the mobile or web. As for your iPhone? This can be used as an additional channel, when you go to a lunch, to briefly check if the situation is under control.
8. The Culture.
After all these points up till now, you have a talented team, working as a well-oiled mechanism with agile processes, who know what to do and how to do it. Now you need to keep the spirits high through the next months or years of the project.
And it takes more than a cool office, table tennis, play station or Friday parties to build the right culture. Culture is about shared values. Culture is about a common story. With our fintech products or services we are often going against big institutions. We are often trying to disrupt the way their business used to work. We are small and want to change the world, going to war with the big and the powerful. Doesn’t it look to you like another variation of David and Goliath story? Don’t smile, this is one of the most effective stories. It unifies people and makes them go in the same direction with the strong feeling of purpose, a mission. This is something many startups in other non fintech branches can’t offer. If you are building the 10th online grocery store in your city, what can you tell your people about the mission?
Fintech software projects are usually technologically challenging. But that is just a risk that needs to be properly addressed with the right people and processes or with the right outsourcing partner. You shouldn’t outsource the responsibility of taking care of your customers or finding the right market fit for your product. But technology is something you can usually outsource and even expect significant added value after finding the right technology partner.
At Empirica we have taken part in many challenging fintech projects, so learn our lessons, learn from others, learn your own and share it. This cycle of learning, doing and sharing will help the fintech community build great systems that change the rules of the game in the financial world!
Empirica was invited to give a lecture on ‘Usage of Algorithmic Trading in investment funds’ at Fund Industry Summit 2014.
Conference gathered representatives from over 70 financial institutions. The event was held in Warsaw and plans are that it will be repeated in yearly cycles. Especially that both organisers and participants deemed the conference a success.
The agenda of the summit included 9 lectures on topics related to investment funds day-to-day operations like MIFID II and AIFMD European Union directeves, Internet funds distribution and organisation of self-care channels.
Empirica’s lecture, held by its CEO Michal Rozanski on ‘Usage of Algorithmic Trading in investment funds’ was a good opportunity to share with the wider audience results of our latest research regarding market impact reduction in high volume transactions.
Empirica CEO, Michal Rozanski during the lecture at Fund Industry Summit
Empirica CEO, Michal Rozanski during the lecture at Fund Industry Summit
Our team on Empirica conference stand
Video summarizing Fund Industry Summit 2014
Empirica has successfuly finished the implementation of its Algorithmic Trading Platform in one of the largest brokerage houses in Poland.
Brokerage house will use our software to:
- aid its internal trading operations, like market making of derivatives on Warsaw Stock Exchange
- offer functionalities of our platform to its institutional clients, which will be able to build, test and execute their own algorithmic trading strategies
Implementation included connecting of our software system directly to the system of Warsaw Stock Exchange (Universal Trading Platform delivered by NYSE Technologies), as well as the integration with transaction systems of brokerage house. Additionally we have fulfilled and successfuly passed tests regarding the highest security, stability and performance requirements.
This implementation is an important milestone for our system. The usage by team of market makers is a proof that our system is capable of performing high-throughput and low latency operations on level required by most sophisticated traders on the capital marketets.
In the space between DIY investing and personal — but pricey — financial advisors sits the robo-advisor, a crop of firms that manage client portfolios via computer algorithms, cutting prices and passing the savings on to investors. These online advisers have taken off over the last several years: There are currently a couple hundred firms in the race.
What’s a robo advisor?
A robo-advisor is an on-line financial advisory firm that leverages automation and algorithms to help manage client portfolios. That automation empowers robo-advisors to offer investment management services to consumers for a fraction of the price of a financial advisor that is human. Lower fees, joined with superior features like automatic rebalancing and tax-loss harvesting, can yield higher returns.
How they work
Most of the companies urge portfolios of low cost exchange-traded funds according to surveys that are on-line that investors fill out. The thought is that investors will do with generally diversified portfolios and low fees.
The companies use algorithms to put investors into various portfolios according to risk tolerance.
How to use Robo-Advisor
Automated Customer Onboarding – the questionnaire
The questionnaire is the first step of using Robo Advisor. User’s profile is being created with parameters like:
- age (defining overall risk aversion level)
- investment goals (defining users expectations)
- users experience with losses/gains
- making important financial decisions
Our Robo Advisory platform covers the interpretation of user’s answers into automated advise.
Balance projection gives the user quick view how his portfolio balance would look like in the future for given investment values. In order to make the projection more eye-catching we introduced possibility of generating balance curve based on either static growth or mathematical function development. For example, on average, portfolio increases 4% every year.
Asset allocation is the selection process of the right instruments adequate to users risk profile. Our platform allows to automate managing the allocation, using defined algorithm. For example, with higher portfolio risk we can invest more into stocks and with smaller portfolio risk we invest more into fixed income products. Real asset allocation model has to be decided.
It is possible to monitor user’s portfolio balance in user dashboard. Platform provides history of portfolio balance over the selected period. User is able to check his current portfolio allocation grouped by three factors:
- Instrument type
- Instrument sector
- Instrument region
Automated portfolio rebalancing is a crucial functionality for robo-advisory service. Let’s assume that user got asset allocation with 60% stocks and 40% fixed incomes. Over the time, because of the reinvesting dividends or other user-defined factor, his portfolio allocation changed to 70% stocks and 30% fixed incomes. User does not want to take such a big risk so we do portfolio rebalancing to back to original allocation.
List of successful robo advisors
Betterment is a perfect starting point for young investors. They make investing easy for beginners by focusing on simple asset allocation, goal …
A free and easy-to-use service that syncs up all your financial accounts in one location. Personal Capital creates summaries of your spending, net …
An automated investing service with an emphasis on asset allocation with low fees. Wealthfront’s service really shines with taxable accounts….
Stash could be the perfect investment app for a new investor. Its $5 minimum initial deposit removes the single biggest obstacle to investing, but the…
Fidelity’s entry into the robo-advisor service helps beginning investors. Its pricing is very transparent, and if you have an existing account, …
Aspiration may be the perfect robo-advisor service for anyone who wants to invest in socially responsible companies. They have low fees, and the fee-…
Vanguard Personal Advisor Services
Overall a solid entry into the robo-advisor space. Though the service will exclude beginning investors because of the high minimum deposit. Other robo…
WiseBanyan is a free robo-advisor service with some decent features. Unfortunately, we question if the business model is sustainable….
Hedgeable brings the techniques of hedge funds down to the less well-heeled masses, so everyone can have access to the investment industry “secrets.”…
TradeKing Advisors is a platform well worth investigating if you’re looking for professional investment management at a very low fee and $500 deposit …
Charles Schwab Intelligent Portfolios
Overall a decent service that deserves a looking into. Though we question its large allocation to cash and choice of some of the ETFs in order to make…
LearnVest is a decent free budgeting tool. Though compared to its competitors lacks investment reporting. Financial planning is available for an …
Rebalance IRA provides insight into your portfolio and helps you make better decisions by not letting emotions get in the way and selling too often, …
AssetBuilder might be a reasonable service to use on large accounts, particularly over $20 million where the annual fee is just 0.20%. But on smaller …
Financial Guard offers straightforward advice, to upgrade your current portfolio, pay lower fees, and choose better funds. Their business model is …
SigFig itself isn’t a bad service, but their recommendations seem simple at best. There are better robo-advisors available….
Extending the customer base
With a customer base that the size of each of the competition combined, based on Stein, robo advisory Betterment can also be bringing folks, along with assets. It’s not difficult to chalk that up to Stein, and its $0 account minimum admits that some of Betterment’s accounts are modest. But he says all of the customers counted in that tally are saving into funded accounts, with most putting a sizeable amount that is “ away.”
That minimum — or instead, the lack of one — has set the pressure on other robo advisors as well as traditional advisors, many of which have dropped their own minimums over the past year. Private Capital, which has $1.8 billion in assets under management, recently lowered its account minimum by an ambitious 75%, falling from $100,000 to $25,000. The company might have the ability to get away with a minimum still in five digits because its customers also get a dedicated financial advisor.
TradeKing Advisors has lowered its minimum. It found its two tiers of service with initial deposit conditions of $25, and $10,000 000; those minimums now sit at $ and $5, 000. Rich Hagen, the business’s CEO, told NerdWallet that minimums were lowered to remain competitive.
And Wealthfront lowered its account condition 500, noting from $5,000 to $ in a blog post that it was reacting to a “surge in demand” from youthful robo customers . Those customers desired to take advantage of Wealthfront’s generous pricing arrangement, which manages the first $10,000 completely free (Betterment bills 0.35% on accounts under $10,000 that consent to a minimum $100 monthly auto-deposit; those without auto-deposits are charged a monthly fee of $3. That $3 a month — which amounts to more than 7% per annum on a $500 balance — is a point of contention between the two robo-advisors, including a public war of words on Medium.)
What to look for
To the reader that is causal, the differences between robo advisory companies might appear small but in reality isn’t. You’ve got a choice between:
- Minimuml Deposit – Some robo advisories it is possible to start out with others and nothing need substantial sums to begin with
- Yearly Fees – Know about ETF fees and hidden costs
- Asset allocation – Asset allocation of each robo advisory may differ quite a bit based upon how old you are, and just how their risk assessment questions are answered by you
- Account Type Support – Do combined, they offer individual, IRA, etc.
- Automation – Some robo services are 100% automated vs human assisted advice
- Tax Optimization – Services like Tax-Loss Harvesting
- Custody of Funds – Handled by you in which they give advice to trading, or directly by the company
- Management of Assets – Manage only a part or all of your assets
- Ending-Target – Retirement simply, or other targets (i.e kids education)
Best Robo Advisors – Breakdown by Asset Size (2016 Ranking Comparison)
Below is the listing of this year’s top robo advisors by asset size.
|#||Robo Advisors||Total Assets Under Management*|
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