Tag: FinTech
Posted on October 4, 2019
Schwab Cuts Commissions, TD Ameritrade Follows
Decades ago, Schwab led the revolution of reducing commissions on trades. High-tech startups, led by Robinhood, are now eliminating commissions altogether. Interactive Brokers slashed commissions on U.S. stocks and ETFs to zero last week. Schwab has responded in kind by announcing that it will cut all commissions on trades of U.S. stocks, ETFs, and options on October 7. TD Ameritrade and ETrade have both followed suit and cut the same commissions. The move rattled the prices of these companies’ shares. Schwab’s and Interactive Brokers’ share prices both fell over 9%, and TD Ameritrade’s, which relies more heavily on commission revenue, fell 25.8%. ETrade, who has kept commissions steady, saw its share price drop 17% on the day of the Schwab announcement.
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Posted on September 27, 2019
As the digital advice industry has grown, acquiring more customers and assets, providers have expanded their role from automated investment managers to digital bankers. A major component of this shift has been the offering of high-yield cash accounts. Betterment, Wealthfront, Ally, Personal Capital, Wealthsimple and SoFi offer these accounts, which have APYs of at least 1.80% and carry FDIC insurance. Personal Capital and SoFi accounts are FDIC insured up to $1.5M—six times the coverage of a savings account opened at a traditional bank. Wealthfront and Betterment offer $1M of FDIC insurance. Robos partner with numerous banks, take in users’ deposits, and spread those deposits across partner banks. This process allows high-yield cash accounts to provide insurance beyond the standard $250K.
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Posted on May 30, 2019
SoFi has been making headlines this month, as they have recently introduced two proprietary ETFs. The funds are as follows:
- SoFi Select 500 (SFY) tracks the performance of 500 of the largest U.S.-listed companies weighted based on a proprietary mix of their market capitalization and fundamental factors
- SoFi Next 500 (SFYX) tracks the performance of the 500 smallest of the 1,000 largest U.S.-listed companies weighted based on a proprietary mix of their market capitalization and fundamental factors.
SoFi continues to diversify their offerings, as they have also recently announced a partnership with two fintech insurance firms. SoFi now plans to offer homeowners and renters insurance through Lemonade and auto insurance through Root. This has been a busy month for Sofi, as they are rumored to be working on an additional round of funding, estimated as $500M. This funding round, reportedly led by the Qatar Investment Authority, is expected to be at a similar valuation to their last round in February 2017.
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Posted on May 28, 2019
“The SEC announced in December that it reached a settlement agreement with two robo advice providers.”
As robo advice grows rapidly and reaches widespread adoption, they are also catching the attention of regulators. The first SEC action against providers occurred at the end of 2018, as the SEC announced in December that it reached a settlement agreement with two robo advice providers. The SEC order stated that Wealthfront claimed to be monitoring outside accounts for wash sales related to their tax-loss harvesting product when, in fact, they were not. The SEC announcement reported that 31% of accounts enrolled in tax-loss harvesting experienced a wash sale in the more than three years that Wealthfront made this claim. Other findings included re-tweeting prohibited client testimonials and paying bloggers for client referrals without the proper disclosures and documentation.
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Posted on May 26, 2019
We recently spoke with Dave Nugent, Head of Investments and part of the founding team at Wealthsimple, a Canada-based robo that has expanded to the U.S. and U.K. markets. Dave provided us with great insight into who the typical Wealthsimple client is and where he sees the future of digital advice.
Read More…“Over the past two years, we have seen a trend in the robo advice industry away from digital-only offerings toward offering access to live advisors at some level of service”
Posted on May 23, 2019
Cash management products spread across direct-to-consumer fintech platforms
The digital advice industry continues to evolve in 2019. Cash management apps, linked debit cards, and high-yield savings accounts are sweeping across direct-to-consumer fintech companies. Wealthfront announced their high-yield savings account this quarter, following Betterment’s cash management program announcement late last year. Meanwhile, Robinhood released their high interest account last December, although it was quickly shelved after regulagatory pushback.
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