Over the last few months, financial services industry participants have started asking whether Google might enter the business, and if it did, what specific markets might the tech giant target? The speculation follows a published report in The Financial Times that Google had hired a consulting firm to analyze the business, probably to scour for pockets of opportunity.

A CEO of an RIA firm with $3 billion in assets and several mutual funds of its own told yours truly that he had been contacted by Google executives and questioned about the fees they pay to market their funds on custodian platforms. For decades, fund companies have chafed at the fees, often as high as 40 basis points, that custodians have charged.

At the same time, custodians are wading into the robo-advisor space in different ways. Fidelity has hooked up with Betterment and LearnVest, while Schwab has crafted its own platform, which charges nothing for service or advice but puts clients in the firm's own proprietary mutual funds and recoups its investment that way.

But a Google or Facebook might be the ultimate robo-advisor, reasons Foliofn CEO and former SEC commissioner Steve Wallman. “They have a natural user base of millennials, [whose] eyes would be the same eyes a robo-advisor would be looking for,” Wallman notes. “There is no reason to think a large tech company couldn’t do what small tech companies are trying to do.”

On top of their billions of users, tech giants have the ability to raise virtually unlimited amounts of cash. Google or Facebook could either build their own platform or buy a fledgling robo-advisor. For that matter, an acquisition of the industry’s large custodian, Charles Schwab, with a market cap of about $30 billion, and/or all the robo-advisors extant wouldn’t be out of reach for Google, with a $350 billion market cap.

Though venture capitalists have poured a quarter of a billion into robo start-ups, many question the long-term viability of the vast majority of firms in the space, especially as big custodians with deep pockets apply competitive pressure. One investor in financial services companies was approached by one of the more successful robo advisors searching for another round of capital and was shocked to learn that the robo had less than $500,000 in annual revenues.

Robo-advisors are hardly the predatory new agents of disruption that some have depicted them to be, in Wallman’s view. After all, they have been around for two decades, he notes.

Some advisors can remember back in 1994, when Nobel laureate William Sharpe started Financial Engines, an early robo-advice platform that struggled in the beginning, but eventually found a strong appetite for its services in the 401(k) market. Hardly anyone remembers NetFolio, a robo firm launched in 2000 that folded in 2003.
Were Google to decide to compete with custodians, robo-advisors and other financial services providers, it could upend the industry. But what types of technology or services would fit Google’s business model? That’s not clear.

Google, Amazon and others have found copyright law to be an annoying nuisance. Would they want to take on huge financial liabilities and face an endless stream of billions in fines that big banks like JP Morgan and Citigroup agree to settle and pay almost every month? Were the tech giants to enter the financial services business, they would make juicy targets for regulators and plaintiffs’ attorney alike.

Liabilities aside, the advice and custodian businesses also are far more service-intensive than what Google and Facebook are accustomed to. Some tech companies “can have a billion users and a few thousand employees; Schwab and Merrill can’t,” Wallman says. Indeed, Facebook paid $19 billion for What’s App, with fewer than 70 employees and more than 400 million users. Amazon, however, might have a structure more conducive to the advice game.