BlackRock buys robo-adviser firm FutureAdvisor for estimated $200m
BlackRock is buying FutureAdvisor, a company that develops robo-adviser technology, for between $150m and £200m.
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Robo-advisers create automated investment portfolios for clients by asking them a series of questions about their income, investment ambitions and tax situation. FutureAdvisor was set up in San Fransisco five years ago by two ex-Microsoft engineers.
Having automated advice removes the costs associated with face-to-face contact, and the technology is increasingly being adopted by financial advice and brokerage firms that want to attract a wider range of customers. Last year, Fidelity took part in a similar deal with Betterment.
BlackRock hopes the move will make financial advice more appealing for those with smaller portfolios, currently put off by the high cost of hiring a broker.
The purchase is expected to go ahead in the fourth quarter of the year, and in the meantime FutureAdvisor will continue working on the $600m asset portfolio it has already acquired.
In May, BlackRock chief executive Larry Fink told an audience at the Bernstein Strategic Decisions Conference in New York that he thought robo-advisers would soon become an investment option all major firms would have to offer.
Everyone talks about how robo-advisers can't connect with clients. I actually believe those kinds of tools are like an ATM machine. We are all going to have to have it.