BlackRock, which acquired robo advisor platform FutureAdvisor in 2015, is shutting down its direct-to-consumer business and transitioning clients to Ritholtz Wealth Management, a New York-based registered investment advisor with $2.7 billion in assets, later this year.
“Ritholtz expects that FutureAdvisor clients will seamlessly transition to Ritholtz, where they’ll receive access to dedicated goals-based financial planning and cutting-edge technology,” Ritholtz said in a statement. “Ritholtz advisors and support staff are looking forward to helping them achieve success in all aspects of their financial lives.”
“We are proud of having served FutureAdvisor clients over the last eight years and are confident that Ritholtz, a national, multi-billion-dollar wealth management firm, has the ability to meet the demands of clients seeking digital solutions for their investing needs,” said a BlackRock spokesperson, in a statement. “BlackRock will continue to serve wealth management clients with our Aladdin Wealth technology offerings.”
FutureAdvisor, which had nearly $1.8 billion in assets according to its April 2022 Form ADV, pivoted toward a business-to-business robo advice model years ago. When BlackRock announced the purchase, the firm said it did not plan to target individual investors with the robo advisor. U.S. Bank partnered with FutureAdvisor in 2016 to launch its automated investment offering.
“FutureAdvisor abandoning direct-to-retail is another sign that stand-alone robo advice products have proved to be a difficult business model,” said David Goldstone, manager of investment research at Condor Capital Wealth Management, publishers of Robo Report and Robo Ranking. “Servicing small accounts with rock-bottom fees is difficult to make profitable, even when most of the servicing, advice and trading are automated.”
“I think FutureAdvisor has suffered from the same problem that many robo advisors have,” Goldstone added. “I believe costs to acquire customers have been persistently high across the industry, and with razor-thin profit margins, it has been difficult for robos to attract enough clients and assets to achieve attractive profits. The direct-to-retail product at FutureAdvisor has long languished after the acquisition by Blackrock, and there have been few, if any, product improvements in the past few years.”
FutureAdvisor first launched in its direct-to-consumer form in March 2012.