SoFi Taken to Task in New Robo Report (TM) Published by Backend Benchmarking; Questionable Move by the Firm Triggers Capital Gains Tax That Will Take Years to Recover

MARTINSVILLE, NJ / ACCESSWIRE / April 25, 2019 / The new 11th Edition of The Robo Report published by Backend Benchmarking covering the first quarter of 2019 doesn’t pull any punches in its critique of moves by robo advisors as it continues to bring transparency to the space. SoFi is at the center of a questionable move selling Vanguard funds to invest in their own similar funds and incurring a big capital gains tax on investors without an opt-out option or prior notice, says BackendB Founder Ken Schapiro.

”I fail to see how SoFi was acting in their clients’ best interest in swapping funds for their own. It’s going to take me 35 years to make up the capital gains tax hit. This is why our quarterly report to investors in the financial digital advice sector is so important. Investors need to know what is being done at these firms in regard to managing their assets as a fiduciary. Although their platform has a suite of undeniably compelling products, we question whether their customers are their top priority,” said Mr. Schapiro.

Highlights of the New First Quarter 2019 Robo Report(TM):

  • Fidelity Go and SigFig emerging as two-year and three-year performance leaders.
  • Schwab’s fixed income perform at the top of the group for the three-year period.
  • Year-to-date performance led to many new names on the leader-board.
  • Swell led the IRA universe by a wide margin.
  • iQvestment, an actively managed portfolio and one of the new that hold individual securities, led the equity performance for the first quarter.

”Schwab’s transition to subscription-based pricing for their hybrid robo product made waves last quarter. Many are questioning whether Schwab’s new subscription pricing will usher in a paradigm shift in the way financial advice is paid for in the U.S.,” said David Goldstone, Senior Research Analyst for the Report.

”Acorns, Personal Capital, Nutmeg, and Ellevest raised a combined nearly $250 million in capital this quarter, proving there is an appetite for investing in established digital advice players,” said Mr. Goldstone.

This quarter he published an in-depth interview with Karen Wimbish, Head of Product for U.S. Bancorp Investments and Financial Planning, about her experience with Intuitive Investor, U.S. Bank’s digital investing platform.

Some takeaways:

  • Digital advice is a solution for self-directed investors who would prefer not to manage their own investments.
  • Industry professionals have learned that most people are not quite ready to invest without some level of human guidance.
  • Robo advice products are finding success with clients before they are ready or attractive to full-service advisors.

The Report ranks the top three robos by performance in Equity, Fixed Income, and Total Portfolio as well as historical performance since each accounts’ inception.

Backend Benchmarking opened and funded portfolios seeking a similar asset allocation to allow for comparison. The knowledge of the underlying assets held helps to understand the structure of the portfolio, the risk, and what is driving performance.

The Robo Report is available for free at Follow the Report on Twitter @theroboreport.

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SOURCE: Backend Benchmarking

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