Robo advisers are picking up human advisers for clients

One of the sharpest criticisms of automated investment platforms, known as robo advisers, is that there’s no human hand to guide you with your money. That’s starting to change.

Betterment, which manages more than $7 billion in client assets, has added two new services to its platform, both involving human advisers interacting with clients, the New York-based company announced on Tuesday. This comes a month after Charles Schwab & Co. SCHW, -1.41%  , the San Francisco-based brokerage and banking firm, created a hybrid digital service with human advisers, nearly two years after launching direct-to-consumer robo adviser. By pairing humans and technology, these companies, including others in a “hybrid” model such as San Carlos, Calif.-based robo adviser Personal Capital, are providing people with options to receive financial advice.

“It’s clear people need advice but it’s very different how they want that,” said Alex Benke, vice president of financial advice and planning at Betterment. Some may want a fully automated service, without ever talking to an adviser, while others may have questions as money management becomes more complex, he said.

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Betterment is now charging a flat fee of 25 basis points for its main service, which has no minimum, instead of tiered-pricing based on how much people invest. For Betterment Plus, where customers receive an annual planning call with advisers, it will charge 40 basis points with a $100,000 minimum. For Betterment Premium, which includes unlimited access to a team of advisers, it costs 50 basis points with a $250,000 minimum. The company is also building a network of advisers it will refer to clients who may want more hand-holding.

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Matching robo advisers with human advisers seems to work, and has been for companies like Personal Capital and Financial Engines FNGN, +0.00%  , one of the original robo advisers that manages employer-sponsored retirement accounts and in 2015 acquired a brick-and-mortar advisory firm to include advisers as part of its offering to clients. Malvern, Penn.-based investment firm Vanguard Group also took a hybrid approach to its robo adviser with a call center when it launched.

Robo advisers have revolutionized investment allocation, making it simple for anyone with some money to try on their own or with the help of advisers (some robo advisers have models for advisers to use with their clients). The technology has also commoditized the fee structure of investment allocation, since they opt for low-cost passive options, such as exchange-traded funds.

“The cost is a race to zero,” said Craig Iskowitz, founder and chief executive of Ezra Group, a technology consulting firm in the financial services industry.

See also: How do startup robo advisers stack up against the big banks?

But they’re not always enough on their own, especially as investors may begin to experience more complex financial situations, such as home ownership and saving for children’s educations, experts say.

Betterment clients, for example, could previously call the company to ask questions about their accounts, but their employees could not provide financial advice, Benke said. There’s also the fear investors will get nervous at the sight of a market downturn, and make the wrong decisions, said Shannon Pike, president of the Financial Planning Association, a professional organization based in Denver. These concerns are leading robo advisers to shift to providing financial advice in a digital manner, as opposed to simply digital investing. “You cannot just have some robotic investment advice,” Pike said. “It’s a tool.”

Though some advisers might have seen robo advisers as a threat when they first launched, Pike said robo advisers have done a great job of getting consumers access to investment advice they previously would not have had. Advisers are also adopting this technology in their own practices.

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