Goldman Sachs Joins Push to Lure Young Clients With Robo-Advisory Tool
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Here's your Money Briefing for Thursday, February 18th. I'm J.R. Whalen for The Wall Street Journal.
You don't have to monitor it every day. They will make sure you're on track. They will make sure that your investing strategy is aligned with the goals you have.
Coming up, our banking reporter Peter Rudiger will discuss a new low-cost digital wealth management tool from Goldman Sachs and what these kinds of robo-advisors bring to the table. That's after the break.
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Used to be you needed to have millions in assets to get access to wealth management services offered by banks. But legions of smaller investors have caught the attention of banks that are now offering digital platforms to help these younger customers manage their money. The latest such tool is from Goldman Sachs. It's called Marcus Invest. It came out this week, and our banking reporter Peter Rudiger has been writing about it. And he joins me now. Peter, thanks for being here.
My pleasure.
So let's start with the basics. What does Marcus Invest do?
So Marcus Invest is what's called a robo-advisory platform. So you deposit some money in a Marcus Invest account and using algorithms, they automatically allocate that to portfolios of stocks and bonds. And then they rebalance those portfolios periodically if they stray from a targeted mix. So let's say your mix is 60% stocks and 40% bonds. If your stocks go up a lot, they'll sell some just to keep you in balance.
How would the service differ from, let's say, a person-to-person wealth management service?
Right. So Goldman is known for their private wealth management group that targets people with $10 million in assets. And there you have the advice of a lot of experts who can tell you what kind of trust accounts you might want, what kind of private equity funds you might want to invest in. And this is much simpler, right? This is just a computer kind of recommending from a specific set of funds just in stocks and bonds that you can be invested in. And you kind of don't get the high touch services that you would get from a human advisor. Although you can call one and ask one for advice if you'd like.
And this robo service isn't free, is it?
So it's not free. It costs about 0.35% of the assets you put in Marcus Invest. And that doesn't include any fees that might be on the underlying funds. That being said, these are mostly low cost ETFs. So those costs are just pretty minimal.
Okay. So tell me a little bit about the value to the consumer. What do they get out of it?
So consumers, sometimes they might not want to open investment accounts just because they think it might be a pain to manage them, right? You have to track what's doing well, what's not. You have to maybe sell positions to maintain an adequate balance, or you have to pay a professional to do all that for you. So Marcus Invest, like other robo-advisory platforms, takes care of that work for you. You don't have to monitor it every day. They will make sure
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