BBVA partners with BlackRock’s robo advisor

By Madhvi Mavadiya | 13 January 2016

The insurance industry has taken another leap into technology as a subsidiary of the Spanish bank BBVA Compass has revealed its partnership with FutureAdvisor, an advisory firm that joined forces with the giant asset management company BlackRock last year.

Robo advisors are becoming increasingly popular as they charge lower fees than the traditional brokers and choose exchange-traded funds (ETFs) using computer algorithms. Alongside this, the way people save and invest is changing which is highlighted by director of the digital consumer segment at BBVA Compass, Jorge Moller.

Moller continued to explain how better decisions have led to better investment decisions and how BBVA’s goal is to be at the cutting edge of fintech, according to Forbes. “We started looking for a simple, highly automated sophisticated technology to drive advice for our tech-savvy customers. We felt FutureAdvisors were the best team to offer investment management solutions to help our clients realise greater control of their finances.”

BBVA Compass Chairman and CEO Manolo Sánchez had a similar attitude and said that this partnership would help clients connect with convenient, affordable advice. “The ultimate goal here is to help our clients take greater control of their finances so they can build bright futures.”

Forbes describes FutureAdvisor as unusual and unique in the way that client assets are analysed and in turn, advised about. CEO of FutureAdvisor, Bo Lu, said that the company offers clients a comprehensive multi-account household-wide view of its investments. “We are not about trying to sell a particular securities issue but to improve a portfolio and align it with the client’s goals,” Lu said.

The partnership will benefit both parties as FutureAdvisor’s excellent digital communications will make backup personal advisors unnecessary and technology will encompass all operations. However, after a hard-hitting month in January, FutureAdvisor has not been popular as Lu explains in Forbes.

We tend to get less than our fair share of nervous calls for a number of reasons. We tend to be selected by clients who are mostly passive investors. They have gotten across the mental hurdle that things are going to gyrate. Second, one of the great powers of a digitally enabled experience is you can get ahead of this in a scalable way.”

In other news, BlackRock also launced a sustainable bond ETF as there is a growing demand for invesment and had a reshuffle of manager in this sector of their business. The asset manager deals with $4.5 trillion in assets and the company's shares rose by 0.4% in midday trading yesterday. 

Recently, Fidelity also partnered with robo-advisor Betterment but decided to offer its own robo service and now offers LearnVest to support advisors. Nasdaq reports that others in this space include The Charles Schwab Corp. and Vanguard Group as they are in the process of gaining partnerships or creating their own platforms, while Citigroup and JPMorgan have provided funding for some major robo advisory companies. 

However, Lu said that the partnership between both companies is a first of its kind. “I’m not aware of another announcement of a partnership between a robo advisor and large financial services firm with goal of giving a better experience to the digital investors.”

According to Reuters, clients will be able to use FutureAdvisor’s automated investment services this year. 

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