Over the last several years there has been a proliferation of digital wealth management platforms for advisors, so it is difficult to stand out in the crowd. But RobustWealth looks like it may soon have what it takes to compete in what has become a crowded segment.

The firm’s founder and CEO Mike Kerins has impressive investment credentials. Before he was at RobustWealth, he spent eight years at Franklin Templeton, where he managed an investment team overseeing a global portfolio of assets equaling $40 billion. He also served as head of asset class research and has expertise spanning strategic and tactical asset allocation, portfolio construction, target-date strategies and liquid alternatives. Kerins is a CFA charter holder as well as a certified financial risk manager. Clearly, he understands the investment side of the business.

Initially, he thought RobustWealth would distinguish itself on its investment capabilities, but he came to realize that providing an integrated, easy-to-use technology platform was equally important. My initial introduction to RobustWealth suggests that it offers both.

RobustWealth is a private-label wealth management platform for advisors. It offers simple yet sophisticated portfolio construction tools, automated trading and rebalancing, a powerful yet simple billing module, the ability to provide tactical asset allocation, a nice advisor dashboard and a client portal. These capabilities allow advisors to offer a private label robo-advisor to their clients if they want to, but even if they don’t, the platform can still automate their traditional business.

The platform can work with multiple custodians. It is currently fully operational with TD Ameritrade, it’s in the testing phase with Fidelity, and it’s close to reaching an agreement with at least one other company. RobustWealth is also in the process of vetting one or more account aggregation providers to bring in assets held away.

Once logged in, an advisor can get an overview of the whole business. From there, the advisor can view a list of clients. When he or she selects one, the extensive client view is revealed.

RobustWealth bills itself as a “goal-based” system, but it’s not in the traditional sense. It is primarily investment driven. You can link one or more accounts to a goal. When you do, the goal or goals show up on the client page. For example, if the client’s only goal is retirement, that’s what you will see as the goal. Among other things, you will see the AUM and cash devoted to the goal; a target-date for the goal, if applicable; an investment framework for the goal, if applicable; and the model applied to the goal, if applicable. You can also see the log-in count for the client portal, so you know how often and how recently the client last checked on the portfolio.

The platform offers two methods for advisors to manage assets applied to a goal. The first one, which is the typical approach for most advisors, is to create a model asset allocation and apply that asset allocation model across multiple accounts or goals. RobustWealth will then execute all of the trades and rebalance opportunistically as needed.

The more sophisticated option is to assign an investment framework to a goal. You can think of an investment framework as something like a private target-date fund for the client. You can create your own glide paths for various dates in the future (for example, a 2025 glide path, a 2035 glide path, etc.), or you can use some default ones that RobustWealth has created for you. You can take existing asset allocation models and build glide paths around them, or you can create distinct asset allocations for your glide path models. Custom glide paths that take into account investors’ time horizons, risk tolerances, etc. are a powerful function that many competitors cannot match. As is the case with the traditional model approach, the platform evaluates portfolio drift daily and rebalances as necessary.

With the “robo” feature turned on, the platform will invest new money to keep the portfolio in balance, rebalance if there’s drift and also rebalance to accommodate withdrawals from the portfolio. The rebalancing program seems to be sophisticated. It takes into account not only portfolio drift but also the risk and the cost of trades, including any mutual fund or custodian fees that may be imposed—plus normal trading costs. It also takes into account tax implications.

At the holding level, you can instruct the program to do things like avoid harvesting short-term capital gains and violating wash-sale rules. You can “lock” a holding in two different ways. If you lock a holding as “ignore,” the program will rebalance the portfolio as if the holding does not exist. As an alternative, you can tag an asset as “hold.” This will cause the application to create a completion portfolio around the holding. For example, you might have a client who works for GE and cannot sell his or her GE stock. Say the company represents 10% of the portfolio. If you classify GE as a U.S. large-cap stock and your model allocates 40% to that category, GE would count for 10% of your allocation, and the program could buy only another 30% of U.S. large cap.

 

RobustWealth currently offers security mapping for all covered mutual funds and ETFs, but it gives the advisor total control over the mapping. By default, RobustWealth assigns an asset class to each asset, but advisors can change them. Furthermore, you can rename asset classes and create new ones. If you like, you can create a whole custom hierarchy of asset classes and sub-classes and reassign assets as you see fit. Although individual equities are not currently part of the default security mapping, I’m told that capability will be added this year.

The fee schedules and billing look flexible. You can build your own tiered fee schedules. You can then create billing groups and assign households to each.

In a nod to basic financial planning, the platform includes something called the “Wealth Projection.” This page shows the projected value of a portfolio over time. This particular functionality is very simplistic. It shows the current value of the portfolio and the projected value over time based on the anticipated rate of return. You can insert a target date (such as the retirement date) onto the graph to illustrate the amount available at retirement, and you can illustrate withdrawals beginning and ending at specified dates. If the projections do not meet the goal, you can illustrate the impact of a onetime contribution to the results. Luckily, this is one feature that advisors can turn off in the client portal if they choose to do so.

Speaking of the client portal, it very much looks and feels like the advisor view, minus some features and controls. It is clean, modern and easy to navigate.

The pricing for the offering is competitive. The full platform costs 20 basis points. One thing that distinguishes RobustWealth’s pricing from that of competitors is that the company lets the advisor turn off the “robo” feature, and only charges for the assets with robo “on.”

“Operationally,” says Kerins, “we believe that advisors should have all of their assets on one platform, so we want to support their ability to do so.” This means that if you want to manage some accounts manually, you can still use RobustWealth to view the accounts and to have a consolidated view of all your business. It also means that all of your clients get access to the modern, user-friendly client portal.

Although RobustWealth is still a work in progress, the initial indicators are highly encouraging. It has a great deal of flexibility built in. If advisors want to outsource investment management to RobustWealth, the robo feature, default asset allocation models and investment frameworks allow them to do it.

Those firms with investment expertise can use RobustWealth as a platform to create models and frameworks, customize asset classes, and still automate as much or as little of the trading and rebalancing process as they like. The ability to load all your accounts on the platform, and only pay for those with “robo on,” is another appealing feature.

Although the platform is not complete, it is clear that the designers made the user interface a priority. So far, it feels intuitive.

The platform was created by institutional investment professionals. They offer institutional quality asset allocation models and glide paths at no extra cost. The ability to create personalized glide paths is an attractive feature not commonly offered by competitors. You can tweak the defaults to make them your own, or you can create your own models and glide paths from scratch.

The cost is competitive, especially since you only pay for the features that you use.

While my initial take is positive, much work remains to be done. Today, RobustWealth rebalances at the household level. I’m told that advisors will be able to rebalance at the goal and household level within three months.

The Wealth Projection, however, is too simplistic. It needs to be improved or removed.

And again, the platform is at present only integrated with the one custodian, TD Ameritrade, and there is not yet third-party account aggregation to bring in assets held away. But we expect to see more custodians and aggregation providers integrated with the system in a matter of months.

RobustWealth does not provide CRM or financial planning. The company will need to partner with industry leaders that do.

Perhaps the company’s greatest current impediment is the lack of performance reporting. I’m told that the functionality is currently under construction, with a planned launch within three months, but even if RobustWealth meets this ambitious deadline, the devil is in the details. Given the firm’s institutional background, one expects that the company can get it right, but we’ll have to wait and see.

Many advisory firms are still trying to figure out their digital strategy. A number of advisors I talk with understand that newer digital technologies can provide them with operational leverage and a better end user experience for their clients, but they are still struggling with implementation. Some firms will ultimately choose one of the well-known B2B platforms for advisors, while other firms are concerned those platforms will not offer them the flexibility they need. For those that fall into the latter camp, RobustWealth is a firm to keep an eye on. If it can continue to execute its plan over the next several months, it will likely win its share of business from advisors.