BlackRock to acquire robo-adviser FutureAdvisor

Aug 26th, 2015 | By | Category: ETF and Index News

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BlackRock, the asset manager behind the iShares exchange-traded fund range, has announced that it is acquiring FutureAdvisor, the fifth-largest “robo-adviser” in the US.

Blackrock to acquire robo-advisor FutureAdvisor

BlackRock is entering the robo-adviser space through the acquisition of FutureAdvisor.

FutureAdvisor has over $600 million in assets under management and is a leader in digital wealth management, offering holistic and personalised advice across clients’ brokerage, IRA and 401(k) accounts.

As is typical of all robo-advisers, investment management is implemented using low-cost ETFs and is delivered through a sophisticated online technology-enabled advice service, making the complete proposition affordable to a broad range of investors.

Investors with assets in the region of $100,000 and over – the so-called mass-affluent – are increasingly turning to technology for investment advice and management. This has come, in part, due to the high fees and unsatisfactory results of traditional wealth managers and financial advisors.

“As demand for digital wealth management grows, we believe that our combined offering will accelerate our partner firms’ abilities to serve the mass-affluent in a convenient, scalable way,” said Tom Fortin, Head of Retail Technology for BlackRock.

Once the acquisition is complete, the offering will be targeted at financial institutions to help them grow their advisory businesses and benefit from this trend. It will operate as a business unit within BlackRock Solutions (BRS), the firm’s investment and risk management platform, and will provide financial institutions with high quality, technology-enabled advice capabilities to improve their clients’ investment experience. 

Commenting on the acquisition, Bo Lu, Chief Executive Officer and CoFounder of FutureAdvisor, said: “BlackRock has dedicated enormous effort over the years to improving financial outcomes through its leading active and passive investment offerings as well as innovative retirement planning tools including its CoRI Retirement Indices. We look forward to integrating and delivering this expertise to investors in partnership with financial institutions in the months to come.”

The move marks another progressive step in BlackRock’s efforts to enter the robo-advice space and gives credence to claims that robo-advisers pose a threat to the traditional wealth management industry.

The acquisition comes on the back of recent initiatives from BlackRock in Europe, including partnerships with IG Group in the UK and InvestBanca in Italy to create ETF model portfolios.

Industry commentators will now be looking towards the larger robo-advisor, firms such as Wealthfront, Betterment and Personal Capital, to see if they too are acquired by traditional asset managers.

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