Digital wealth management platforms are among the few fintech firms that stand to gain as a result of the Covid-19 crisis — but the long-term effect will be the “mainstreaming” of hybrid robo-advice, according to a recent report. 

In the short term, tech firms in the wealth management space, including Robinhood and Stash, are raising substantial money, CB Insights says. At the same time, consolidation in the sector is increasing:  asset management firm Franklin Templeton recently acquired AdvisorEngine, which provides wealth management technology to more than 1,200 advisory groups, according to the report. Personal finance platform SoFi has also made several large acquisitions in recent months, CB Insights says.

But in the long term, what’s likely to emerge is growing acceptance of hybrid robo-advice, according to the report. That’s because despite the gains in the number of users experienced by robo-advice pioneers such as Wealthfront and Betterment over the past decade, investors have increasingly turned to human advisors during recent market volatility, CB Insights says. Betterment, along with Vanguard, experienced higher customer engagement with human advisors in the first quarter of 2020, according to the report.

That means clients may end up gravitating to better-established firms offering hybrid advisory services, such as Fidelity and Charles Schwab, forcing new entrants such as Betterment and Personal Capital to compete on price to keep their clientele, CB Insights says. 

But the digital advice sector will also likely see increased demand for “autopilot” personal finance solutions, which will result in expanded suites of financial tools, according to the report. Wealthfront, for example, is already working on offering customers mortgages while Betterment is adding checking and savings products, CB Insights says. 

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