BlackRock, Inc.’s (BLK - Free Report) ‘robo-advisory’ platform FutureAdvisor got its first big bank client BBVA Compass, a U.S. wing of the Spanish firm Banco Bilbao Vizcaya Argentaria, S.A. (BBVA - Free Report) , which signed an agreement with the former to expand its automated investment services.
BlackRock forayed into the robo-advisory space with the acquisition of FutureAdvisor, a digital wealth management company, last year. The investment manager plans to sell FutureAdvisor’s digital advisory services to banks, brokerage firms and insurers, enabling them to use the robo-platform to serve mass affluent clients.
Over the last few years, financial firms have been veering toward technology to advise clients on investment options. By analyzing information such as clients’ risk taking ability, age, investment goals and income, the software suggests a portfolio of investments. Owing to the use of technology in the allocation process, this is more cost efficient than traditional advisors. This in fact has also led large banks to seek robo-advisory services.
The agreement with FutureAdvisor will help BBVA Compass provide technology-enabled advice capabilities to its clients. The customers will be able to link external investment accounts with FutureAdvisor and obtain a tailored plan for their portfolios. Also, the bank’s clients will have access to automatic portfolio rebalancing and tax-loss harvesting.
While the partnership will strengthen BlackRock’s position in the robo-advisory space, it will help BBVA Compass connect with its tech-savvy clients by offering them a highly-automated investment platform.
Firms like Fidelity, Vanguard Group and The Charles Schwab Corp. are currently active in the robo-advisor space either through partnerships or by creating their own platforms. Also, Wall Street giants such as Citigroup Inc. (C - Free Report) and JPMorgan Chase & Co. (JPM - Free Report) have funded some major robo advisory companies.
Currently, BlackRock carries a Zacks Rank #3 (Hold).
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