We are only about three months into the year, but robos have already made waves in the wealth management space, and the ongoing debate of human vs robo vs hybrid models continues.

If you haven’t been following:

Yesterday, Charles Schwab — one of the more “traditional” players in the wealth management space — launched its “less-traditional” product: Schwab Intelligent Advisory, which combines the company’s fully automated investment tech, with human professionals.

About a month before that, Jan. 31 of this year, Betterment — one of the largest robos in the space — introduced two new hybrid plans, featuring human advisors. A few days after Betterment’s announcement, Wealthfront — a millennial-focused digital advisor — announced that it was adding fully automated financial planning to its offering. The announcement was followed up by a blogpost by Wealthfront’s CEO Andy Rachleff — “Software is Better Than People” — basically using Amazon, Uber, and Google to prove how painstaking it is to work with actual humans (and taking a dig at Betterment).

Now that we are all caught up, is there still space for humans in the wealth management space?

If you ask Schwab, humans are ever so important.

“Automated investing allows us to let human advisors focus on things that humans are doing best,” Neesha Hathi, leader of client experience and digital platforms at Schwab said last year, while discussing early results of the fully-automated Schwab Intelligent Portfolios product. “That is asking questions, working with clients during challenging periods, handholding basically. In January [2016], we were watching our clients when the market went through a shakeout. We saw a 30% increase in our call volume. Customers were worried, and they wanted to talk to a human person, someone to explain what exactly is happening with the markets. Sometimes, we underestimate the value of handholding.”

Thus, this week’s launch of a hybrid model for Schwab was no surprise. The new service is for clients with at least $25,000 investments. It offers financial planning features, and charges 0.28% fee on assets.

But handholding is so “baby-boomer,” and not at all “millennial.”

“The industry is so set on this idea of ‘how can you not have a human, you need this.’ To us, human advisors seem more impersonal for clients,” Katherine Wauck, senior director of corporate communications at Wealthfront, told Bank Innovation. “Calling someone on the phone, going to their office, Skyping — that’s just a terrible experience, and we heard that feedback first-hand.”  

Wealthfront clients weren’t “freaking out” during the market dips last year, Wauck said, and that’s all thanks to the transparency and passive investing strategy that Wealthfront encourages. “We are clear on our strategy, we never talk you on the ledge,” she said.

Wealthfront currently has about 100,000 client accounts, with more than $5 billion in assets under management as of March, up from $2.6 billion in March 2016.

The company had it’s biggest deposit month in February. The launch of Path — the company’s automated financial planning product — was the driver, according to Wauck, but Betterment’s newest fee structure could have contributed as well.

Here is an amusing Twitter feed on this (with Wealthfront adding to the discussion later on):

This is kick in the face to customers that were saving aggressively to reach the lowest cost .15% management fee.

— Mylo Carditis (@rjpedigo) January 31, 2017

At the end of the day, according to Wauck, audience is Wealthfront’s main differentiator. “If we only wanted to accumulate assets, we would have done that long ago,” she said. “We are this wacky Silicon Valley company, that’s like ‘we are going to change the whole industry,’ and we might be wrong, but that’s what we want to take on.”

Next Page