Adding humans to its digital offering was nothing new for Betterment, and digital is still at its core.

In fact, the company has always had CFPs on its team available for clients, Joe Ziemer, VP of communications at Betterment told us. “It was simply not something we marketed, so we thought to make this official,” he said. “By no means is this a statement on the state of digital offerings, and our core business is still in the digital advisory space.”

Customer research showed that consumers were more comfortable signing up for robo services, when adding a human advisor is an option, Ziemer said. “Our hybrid model leverages the same technology, but having the option of upgrading to our Plus and Premium accounts makes people more comfortable, even if they do not intend to upgrade right away.”

Currently, Betterment has about 225,000 accounts, with almost $8 billion in assets under management, up from $6 billion from January this year.

The Plus account sets clients up with an annual call with CFPs for a 0.40% fee ($100,000 minimum investment), while the Premium account offers unlimited access to professional advisors for a 0.50% flat fee ($250,000 minimum). At the same time, the company upped the fees for its basic offering to 0.25% per year, up from 0.15% (which is what the folks on Twitter were upset about).

The hike is not connected to the addition of humans to the mix, since the basic account does not feature humans, according to Ziemer.

The reason behind the hike is unclear, but as Dwight Leeper, a financial advisor with Merrill Lynch puts it on Quora: “Not to be smart, but because they can. They are still a whole lot cheaper than I am.”

So who’s winning?

Like in every saturated fintech market, those that find a unique niche or seal a successful partnership will be the winners, according to Alex Baghdjian, senior offering associate at Watson Financial Services Solutions.

“Different people need different things,” he told Bank Innovation. “If you are somebody with some more assets to manage, you may need a person to provide those complex services.” In the short run, hybrid models could be beneficial, as those would enable robos to offer more complex financial products to clients, quicker, Baghdjian explained.

“Even in the last five years we saw most robos go from simple asset management, to tax loss harvesting and now financial planning too, and that’s only going to grow,” he said. “And customers need to have options right now, so offering fully-automated options, as well as hybrid.

With all the new players in the space, “there will certainly be more collaboration, and not just with larger FIs, but among each other as well,” Baghdjian added.

Betterment’s Ziemer agrees, citing the number of new entrants in the space. “There will be a couple of winners, who manage to stay, the rest will be a combination of white-labeling products, or teaming up with other advisories in the space,” he said. The company already offers a white label service.

Wealthfront, on the other hand, plans to keep up its standalone position.

“We’ll be adding more things around home, and around savings, around tuition,” Wauck said. “Our goal is to build a large, meaningful, and profitable consumer business, and we are in this for the long-run.” 

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