US-based Capital One Investing, a subsidiary of Capital One Financial Corp., today announced the launch of Advisor Connect, a suite of managed portfolios including a robo-advisor service aimed to provide investors a new set of managed products under its existing self-directed and full-service brokerage and advisory product line.
The company explained in an official statement that the new digital portfolios are unbiased as no financial advisors are compensated and none of its own proprietary funds are traded within the newly launched portfolios.
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At Capital One Investing, our goal is to build planning tools that help customers invest with confidence and manage portfolios in ways that work best for them.
Robo-advisor rebalancing
Part of the appeal of robo-advisor offerings, besides the cost structure, is that any subsequent portfolio rebalancing that is required, based on initial target allocations, can be fully automated.
This helps a portfolio take advantage of changes in the market on a systematic basis without the over-trading that may typically happen within an active investment that can lead to higher costs and potentially worse performance - compared with passive-style products that merely try to follow the index and rebalance (including averaging down) when target allocations change.
In addition, Capital One Investing has a dedicated team of people to support investors with the new offering and to help keep the human touch in the equation to guide clients.
Advisor Connect marks a significant milestone on our journey to build a customer-first, conflict-free and transparent investing experience that empowers today's investors to plan for the long term.
7 Models based on ETFs
The cost structure of the new funds is based on an annual advisory fee of 0.9 percent, and investors need a $25,000 account balance to invest in the new managed service which permits one portfolio per account and uses low-cost 3rd party ETFs which have become a popular choice for robo-advisory offerings to help keep fees minimal.
Yvette Butler
Source: LinkedIn
According to people familiar with the product at the company, there are 7 models within the new portfolios in the Advisor Connect offering, ranging from conservative to aggressive and based on low-cost Exchange Traded Funds (ETFs).
These offerings combine or chose from nine to twelve ETFs - from iShares or Vanguard or Powershares - and determines overall portfolio weightings based on client's investment objectives and risk appetite.
A certified financial planner within the Advisor Connect division explained to me that based on a 10% level of drift the portfolios are set to automatically rebalance, hence the automatic robo-advisor essence of the offering - although this offering still has a strong human element to it with the team's support.
Human touch still present
"At Capital One Investing, our goal is to build planning tools that help customers invest with confidence and manage portfolios in ways that work best for them. We're providing flexible solutions that fit seamlessly into everyday investors' busy lives," said Yvette Butler, president of Capital One Investing, commenting in a statement regarding the launch.
"Advisor Connect marks a significant milestone on our journey to build a customer-first, conflict-free and transparent investing experience that empowers today's investors to plan for the long term."
Mrs. Butler added: "Many investors want to be involved in day-to-day management of their own finances and digital tools can do a great job keeping them on track and their portfolios balanced. But when life throws you a curve or your goals change, working with an advisor can help you pivot and reassess your game plan. Advisor Connect provides the best of both worlds, access to great online tools along with support from personal financial advisors when you want or need it."
