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Fourth Quarter 2020 Robo Report EDITION 18 Highlights: e are proud to publish the 18th edition of the Robo Report covering the fourth quarter of 2020, and the 6th edition of the Robo Ranking. is Report is a continuation of an W ongoing study that monitors well-known robo advisors. We strive to provide a reliable resource for both investors and professionals interested in the digital advice industry. SigFig extends its reign as Best Overall Robo while SoFi emerges as a close contender (pg. 7) Titan Invest and themed Morgan Stanley portfolios sit atop the performance leader boards (pg. 14) Fidelity, Bank of America, and Schwab roll out new free planning apps facilitating goals-based investing for everyone (pg. 24) Walmart announces partnership with Ribbit Capital for a potentially groundbreaking oering (pg. 26) Is direct indexing the next wave to hit robos? (pg. 23) Interview with SoFi explains the path to becoming a holistic nancial services provider for the modern era (pg. 27)Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Robo Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Robo Ranking Scores. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Award Winners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Taxable Top Performers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Performance Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 SRI Performance Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Taxable Performance Chart. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Industry Trends and Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Interview With SoFi Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Charts and Tables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Funding and AUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Taxable Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Retirement Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Taxable Account Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Retirement Account Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 International Allocation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Risk Statistics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Normalized Benchmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Robo Ranking Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Terms of Use and Disclosures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 2 Table of ContentsThis edition of the Robo Report tracks 92 accounts at 43 different providers and includes the Robo Ranking , the most comprehensive analysis of robo advisors available. The Ranking includes both qualitative factors, such as access to advisors and financial planning features, as well as the performance metrics of our accounts held at each provider. SigFig Maintains Best Overall Robo Position, SoFi and Fidelity Go Follow Propelled by strong performance, access to live advisors, low costs, and a strong digital platform, SigFig has won the award for Best Overall Robo for the second Ranking in a row. While Schwab, Personal Capital, Wealthfront, and Betterment have some of the best digital platforms and top-notch digital planners, performance has held these providers back from being contenders for our Best Overall Robo award. However, all four have received awards in this Ranking for the qualitative categories where they shine. SoFi, driven by its performance, placed second and Fidelity Go placed third for the Best Overall Robo award. Titan Finishes off Strong Year, SigFig Top 5-Year Performer Titan capped off the year with another very strong quarter thanks to its active, stock-picking strategy. In the fourth quarter, it returned 15.89%, giving it a total return of 44.42% in 2020. Titans stated strategy is to bring exceptional returns to the average investor through a hedge fund-like approach. So far, it is delivering. This portfolio is an all-equity portfolio. For reference, the S $3/month for Invest + Acorns Later + Acorns Spend; $5/mo for Acorns Family (includes family services). For balances above $1 million contact Acorns directly 0.05% Ally Financial 9 7.58% -1.14% 0.50 $100 0.30% annually; Also offers cash-enhanced portfolio with 30% invested in cash and no management fee 0.06% Axos Invest 8 8.99% -0.01% 0.55 $500 0.24% annually 0.09% Betterment 27 7.22% -1.84% 0.43 Digital: No minimum; Premium: $100,000 Digital: 0.25%; Premium: 0.40% (unlimited chat and calls with advisor), 0.10% discount on balances above $2M 0.09% E*Trade 21 8.33% -0.45% 0.53 $500 0.30% annually 0.05% Ellevest 38 7.25% -1.29% 0.46 Digital: No minimum; Private Client: $1 million $1/mo, $5/mo, $9/mo - all of which offer investing, debit card, and increased access to discounts for coaching and financial planning based on tier level 0.07% Fidelity Go 33 8.24% -0.59% 0.53 Digital Only: No Minimum; Personalized Planning Guided Investing with an Advisor: $20,000 Guided Investing: 0.45% annually (digital only); Guided Investing with an Advisor: 0.85% annually 0.07% Morgan Stanley 12 7.49% -1.55% 0.47 $5,000 0.35% annually 0.08% Personal Capital 4 7.25% -2.23% 0.43 $100,000 0.89% annually for the first $1 million; lower at different tiers over $1 million 0.10% Schwab 5 5.90% -2.66% 0.35 Intelligent Portfolios: $5,000; Intelligent Portfolios Premium: $25,000 Intelligent Portfolios: No fee (digital only); Intelligent Portfolios Premium: $300 initial planning fee, $30/month subscription 0.18% SigFig 6 9.12% 0.23% 0.59 $2,000 No fee for the first $10k; 0.25% annually for balance over $10k 0.07% SoFi 17 8.61% -0.21% 0.57 $1 No management fee 0.04% TD Ameritrade 10 8.68% -0.65% 0.52 Essential Portfolios: $5,000, or $500 if automatic recurring deposits are set up; Selective Portfolios: $25,000 Essential Portfolios: 0.30% annually; Selective Portfolios: tiered at a higher fee level depending on account balance and portfolio selected 0.05% United Income 16 4.83% -3.89% 0.30 No minimum 0.99% annually, lower at different tiers above $1 million 0.16% Vanguard 4,A 8.04% -0.74% 0.51 Vanguard Personal Advisor Services: $50,000; Vanguard Digital Advisor: $3,000 Vanguard Personal Advisor Services 0.30% annually for the first $5 million; lower at different tiers over $5 million. Vanguard Digital Advisor combined fund and advisory fee is capped at 0.20% 0.07% Wealthfront 22,B 7.74% -1.32% 0.45 $500 0.25% annually 0.10% Wealthsimple 11 6.86% -1.92% 0.47 Basic: No minimum; Black: $100,000 Basic: 0.50% fee on accounts less than $100k; Black: 0.40% on accounts greater than $100k 0.11% Wells Fargo 14 9.18% 0.23% 0.54 $5,000 0.35% annually; discounted to 0.30% if subscribed to other specific Wells Fargo products 0.13% Zacks Advantage 29 7.88% -0.84% 0.49 $25,000 0.70% on accounts less than $100K; 0.50% on accounts between $100K and $250K; 0.35% on accounts $250K and above 0.081-Year Trailing Top Performers Produced by Backend Benchmarking for BackendB 2-Year Trailing Top Performers Produced by Backend Benchmarking for BackendB 3-Year Trailing Top Performers Produced by Backend Benchmarking for BackendB 4-Year Trailing Top Performers Produced by Backend Benchmarking for BackendB 5-Year Trailing Top Performers Produced by Backend Benchmarking for BackendB Total Portfolio winners are based on the portfolios return vs. the Normalized Benchmark. Returns are net of fees and are as of 12/31/2020. 14 Taxable Top Performers Best 2nd 3rd Total Portfolio Titan Invest Morgan Stanley Robotics Morgan Stanley Emerging Consumer Equity Titan Invest Morgan Stanley Robotics Morgan Stanley Emerging Consumer Fixed Income Wealthsimple Interactive Advisors Legg Mason SigFig Best 2nd 3rd Total Portfolio Wealthsimple SRI Merrill Edge SRI Wells Fargo Equity Morgan Stanley SRI Wealthsimple SRI US Bank Fixed Income Wealthsimple E*Trade TIAA Active Best 2nd 3rd Total Portfolio Tie: Wells Fargo there are real differences in portfolio construction that lead to disparate outcomes in returns. There are differences of over 2% to 3% annually in the returns for both equity and fixed-income performance among the best-performing and worst-performing portfolios. That sort of difference will have significant impacts on the long-term growth of an account, and so it is important for clients to carefully select providers. 18 Over the 2-year trailing period, nearly all SRI portfolios outperformed their counterpartRobo Advisor Average Returns Returns are net of fees and are as of 12/31/2020. All returns for periods longer than one year are annualized. Produced by Backend Benchmarking for BackendB Index Returns Returns are as of 12/31/2020. All returns for periods longer than one year are annualized. Produced by Backend Benchmarking for BackendB 19 Q4 2020 1-Year 2-Year 3-Year 4-Year 5-Year Equity 15.90% 14.90% 20.49% 9.40% 12.28% 11.90% Fixed Income 1.44% 6.30% 6.97% 4.56% 4.48% 4.38% Total Portfolio 10.33% 12.40% 15.54% 7.79% 9.55% 9.23% Index 3-Year Return Domestic Russell 3000 14.44% International Emerging Markets MSCI Emerging Markets 6.52% International Developed Markets MSCI EAFE 4.86% Value Russell 3000 Value 5.86% Growth Russell 3000 Growth 22.43% Large Cap Russell 1000 14.77% Small Cap Russell 2000 10.19% U.S. Aggregate Bond Barclays U.S. Aggregate 5.33% Intermediate Corporate Bonds Barclays Intermediate Corp. 5.68% Municipal Bonds Barclays Municipal 4.63SRI Account Equity-Only Performance 20 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% Betterment Betterment SRI E*Trade E*Trade SRI Ellevest Ellevest SRI M1 Finance M1 Finance SRI Merrill Edge Merrill Edge SRI Morgan Stanley Morgan Stanley SRI TD Ameritrade TD Ameritrade SRI TIAA TIAA SRI Wealthsimple Wealthsimple SRI 4Q 2020 1-Year Trailing 2-Year Trailing (Annualized) 3-Year Trailing (AnnualizedTaxable Account Performance 21 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Acorns Ally Financial Axos Invest BBVA Compass Beanstox Betterment Betterment Goldman Sachs Smart Beta Betterment Income Betterment SRI CitiGroup Citizens Bank E*Trade E*Trade Active E*Trade SRI Edelman Financial Engines Ellevest Ellevest SRI Fidelity Go Fifth Third Bank FutureAdvisor Interactive Advisors Interactive Advisors Legg Mason Global Growth and Income Interactive Advisors State Street SSGA Moderate Interactive Advisors Wisdom Tree Moderate Aggressive JP Morgan Chase You Invest Liftoff (Ritholtz Wealth Management) M1 Finance M1 Finance SRI Merrill Edge Merrill Edge SRI Morgan Stanley Active Morgan Stanley Defense and Cyber Security Morgan Stanley Emerging Consumer Morgan Stanley Gender Diversity Morgan Stanley Genomics 4Q 2020 1-Year Trailing 2-Year Trailing (Annualized) 3-Year Trailing (Annualized) 4-Year Trailing (Annualized) 5-Year Trailing (AnnualizedTaxable Account Performance (continued from previous page) 22 24.10% 44.42% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Morgan Stanley Global Frontier Morgan Stanley Inflation Conscious Morgan Stanley Morgan Stanley Robotics Morgan Stanley SRI Personal Capital Prudential Qapital Schwab Schwab Domestic Focus SigFig SoFi Sustainfolio TD Ameritrade TD Ameritrade Income TD Ameritrade Managed Risk TD Ameritrade Opportunistic TD Ameritrade SRI TIAA TIAA Active TIAA SRI Titan Invest Titan Invest Opportunities Strategy Twine (John Hancock) UBS Advice Advantage United Income US Bank Vanguard Digital Advisor Vanguard Wealthfront Wealthfront PassivePlus Wealthsimple Wealthsimple Halal Wealthsimple SRI Wells Fargo Zacks Advantage 4Q 2020 1-Year Trailing 2-Year Trailing (Annualized) 3-Year Trailing (Annualized) 4-Year Trailing (Annualized) 5-Year Trailing (AnnualizedA Year of Change 2020 was another significant year in the continued evolution of the robo advisor industry. Once defined by a handful of fintech start-ups, robo advice is now ubiquitous after years of acquisitions, closures, and product launches. This year saw the acquisition of Personal Capital and the closure of Motif, further slimming the landscape of independent robo advisors. Multiple acquisitions of direct indexing technologies have primed the industry for a wider application of this technology. Walmart announced a partnership with Ribbit Capital that may represent a significant step forward in the democratization of professional management. The launch of financial planning tools by three major firms will help more Americans form some kind of financial plan. We look forward to what innovations will arrive in 2021, specifically in the areas of direct indexing, Environmental, Social, and Governance (ESG) investing, smart-cash management, and financial planning as each of these become more widely available and accessible to all investors. Is Direct Indexing the Next Evolution? Over the year, there were several significant transactions that included direct indexing technology. Charles Schwab acquired Motifs technology stack in June, Goldman Sachs acquired Folio in September, Morgan Stanley acquired Eaton Vanceincluding its Parametric businessin October, and BlackRock acquired Aperio in November. In light of the Motif acquisition, Schwabs chief digital , Neesha Hathi, explained that “We are thrilled to bring transformative technology to Schwab to help our clients navigate their investment needs in a more personal way.” Similarly, Folios fractional shares technology furthers Goldmans abilities to offer direct indexing. Parametric has been a pioneer in the direct indexing space for well over two decades through its “Custom Core” SMA, which now belongs to juggernaut Morgan Stanley. Lastly, BlackRock purchasing Aperio underscores this trend. In BlackRocks press release, it described Aperio as innovating capabilities that “embrace the uniqueness of each investor and enhance after-tax performance,” and that it has “pioneered individually customized ESG portfolios.” The use of models and automation has allowed robo advisors to offer professional asset management that has greatly reduced costs through scalable business models. The scalability of these platforms comes at the cost of portfolio 23 Industry Trends and Outlook: A Year in Review Big industry shake-ups include Motif closing its doors while Personal Capital and TD Ameritrade get acquired in landmark transactions Incumbent rms launch free nancial pl
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