The Philadelphia region spawned two new robo-advisers recently, one started out of Broomall, the other out of Lambertville.
Both TradingFront.com and RobustWealth.com create what are known as "white label" robotic trading platforms for financial advisers. In other words, your financial planner can order up his or her own automated trading system, which is useful for small clients who might have fewer assets and need less personal attention.
TradingFront, built by Xin Song and David Foulke, originated as a start-up out of Alpha Architect.
Foulke and Song built a trading platform for portfolio managers Wes Gray and Jack Vogel at Alpha Architect, itself a start-up money-management firm out of Broomall.
"We spun out TradingFront, David and Xin are now operating it, and we are still a huge client and fan," Gray said. "Soon, everyone is going to have their own robo!"
Foulke and Song declined to comment, but we gleaned that after they built the trading platform for Alpha Architect, investment advisers began asking for their own robo-advisers. Song, a native of China, and Foulke, who attended Wharton with Gray and Germantown Friends for high school, are seeking investors for TradingFront.
(We were pleased to see Alpha Architect and Gray highlighted in Friday's Wall Street Journal online, since we first profiled the firm way back in 2015.)
The second local robo-adviser start-up is RobustWealth.com, founded by Mike Kerins, a native of Newtown and a Council Rock High School alum.
After earning a double major in chemical engineering and finance, Kerins moved to New York to work for Franklin Templeton, the mutual-fund complex. He left to start RobustWealth in May 2015.
Today, RobustWealth has 42 clients for whom the start-up has built private-label robo-advisers, investment planners overseeing about $500 million in assets. RobustWealth charges its own fee separate from the manager, from 0.10 percent to 0.40 percent annually, Kerins said.
"I got the idea because I was working on target-date funds at Franklin Templeton, in particular the glide path asset allocation," meaning the percentage of stocks and bonds allocated in each different fund based on a retiree's age.
"When I was working on that, I realized that using something generic, the market needed something more customized. Our robo is different in that we build a custom glide path to fit each investor's goals – and reduce risk over time. The delivery of models and investment solutions was very one size fits all – all product driven" at the big firm where he worked.
"The problem we solve — for small registered investment advisers all the way up to big institutions — is to allow them to launch a robo-digital adviser quickly and tie it to the rest of their wealth management," Kerins said. RobustWealth uses TD Ameritrade as its custodian, and will also partner with Apex in June.
"Advisers want their own robos. Certain things humans do better, and other things robots and computers do better," he said. For small clients under, say, $500,000, the robo-adviser "allows them to grow into a bigger client. As the client's assets grow, an adviser can handle all the estate planning and tax complexities on the same platform."
Kerins, 34, employs about 25 people in Lambertville, Denver, and California, and has raised venture-capital money, "which lets us be independent."
Scholarship for African American financial planners
Thirteen percent of the U.S. population is African American, yet among financial-services practitioners just under 8 percent are. American College of Financial Services, based in Bryn Mawr, wants to double the number of African American financial advisers serving the profession by 2027 by providing scholarships, educational support, and placement opportunities.
"One of the biggest problems facing the financial-services profession is a profound lack of diversity," said Robert R. Johnson, president and CEO of American College. "We believe all of us in this field have more work to do in recruiting, educating, placing, and supporting thousands more African American financial advisers. The face of this profession needs to change, and the change can start right now."
Marsha Barnes is American College's first scholarship recipient. She will be pursuing the certified financial planner (CFP) designation. Barnes is also certified in financial social work and founded the Finance Bar, an educational personal-finance hub on wheels and personal-finance suite.