Robo-advisors’ time has come -- and it may have gone.

That’s the gist of a new white paper from New York-based Silver Lane Advisors, titled “Have Roboadvisors Jumped the Shark?”

When a television series “jumps the shark,” it reaches a point of saturation and episodes hinge on increasingly bizarre plot devices, no longer concentrating on the character relationships that made them initially popular. “Jumping the shark” now generally refers to the inevitable decline in something’s quality and relevance.

In the same way, Silver Lane argues that some of the media hype surrounding robo-advisors borders on ridiculous, and if independent robo-advisors don’t adjust to a changing marketplace, they will find themselves eclipsed by traditional financial firms.

The analysis compares robo-advisors to the online banking movement of the 1990s.

Starting in 1994, a number of online-only banks attracted a small rush of early adopters, creating a tech-driven start-up craze.

Over time, large, traditional brick-and-mortar banks recognized the utility of online banking and began to flood the market with their own online portals.

“Once Bank of America threw its weight behind its own online banking product, it was adding more accounts every 90 days than [Internet-only banks] did in five years,” writes Silver Lane.

The relatively new Internet-only banks couldn’t compete with the well-established industry mega-brands, and within a few years most of them folded.

“While online account access took off in the 1990s and 2000s, it wasn’t Internet-only banks that survived but rather the online banking offerings of existing banks. Internet-only advisors are likely to be the exception, not the rule,” writes Silver Lane. “Going forward, it is our view that most customers will look to the Internet as just an additional delivery channel to complement the way they currently access their investment accounts, much like they already use online banking.”

First « 1 2 3 » Next