The key aspect that has drawn me to roboadvisors is the ability for even the smallest of clients to finally have access to affordable wealth management. After all, shouldn't everyone have a chance to retire comfortably in the modern world? Whether individuals take advantage of this by choosing to properly manage a budget, save, and invest for retirement is another matter altogether. But I'll get into that another time.
Regardless, for the longest time, there simply hasn't been a great option for many potential investors; whether the reason be high minimums, high fees, or a combination of the two. So when an innovation comes along that looks to benefit those on Main Street, I take notice.
Today, Wealthfront announced that they are now offering accounts with a minimum balance of only $500 - that's down from the previous $5,000!
Based on many requests from potential investors that simply didn't have $5,000 to invest, the company decided to dramatically lower their minimum.
What's the big deal? To be sure, Betterment already offers access to their services with no minimum account size. However, their services come at a price: a $3 fee for accounts under $10,000 that do not automatically invest $100/month. Wealthfront now offers access to their services for free under $10,000. In return, the company is betting that they can gain enough scale and market share over time.
This is capitalism hard at work and it stands to ultimately benefit the end customer. Roboadvisors should continue to depress pricing throughout the industry over time, making it ever cheaper and easier to receive financial adivce.
The longer someone has to invest, the greater the potential to compound wealth over time. The cheaper the cost, the more money that stays in your pocket. Now aren't those two goals worth striving for?
Check out more articles written here at RoboRiches in our archives.
There are many roboadvisors to choose from; each with distinct characteristics and a wide variety of services offered. We break down the similarities and differences between these firms here at The List.