“The higher the fee, the greater the viability,” Edelman says. Personal Capital has “CFPs providing advice and service, not just algorithms.”

It’s also worth noting that, while many start-ups don’t make it, others eventually succeed, but in a very different business than they expected at the beginning. The first robo-advisor, Financial Engines, spent the better part of a decade searching for a real business before striking it big in the 401(k) consulting business. With trillions in unmanaged assets, the 401(k) market remains ripe for both human and robo-advisors.

Financial Engines had one other advantage. Its founder and chairman in the early years was Nobel Laureate William Sharpe, a distinguished Stanford University professor. The venture capital community is overpopulated with alumni from Stanford where, by all accounts, Sharpe was universally beloved by his students.


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