New alliance with industry innovator: FutureAdvisor

Related links

• BBVA Compass teams up with robo FutureAdvisor (Forbes, Jan. 12, 2016)

• Bank teams up with FutureAdvisor to offer clients investment platform (Investment News, Jan. 12, 2016)

April 14, 2016

BBVA Compass became the first major bank to sign on with FutureAdvisor earlier this year, forging an alliance with the San Francisco firm to bring investment management services to a greater slice of the bank's clients through digital means.

BBVA Compass clients will be able to use the award-winning firm's automated investment services and digital-advice platform later in 2016. The collaboration is seen as a way to make sophisticated tools and guidance available to digital-savvy clients who aren't currently taking advantage of BBVA Compass’ investment services, and demonstrates the bank’s willingness to align itself with innovators who are disrupting business as usual.

"FutureAdvisor gives us a way to connect more of our clients with convenient, affordable and trusted advice," said BBVA Compass Chairman and CEO Manolo Sánchez. "The ultimate goal here is to help our clients take greater control of their finances so they can build bright futures."

The alliance comes as digital-advice providers are experiencing unprecedented growth. According to market-intelligence firm Corporate Insight, managed account assets among the 11 leading digital advice providers — which includes FutureAdvisor — grew from $2.6 billion to $8 billion, an increase of 208 percent, in 15 months.

It also comes amid a headline-generating year for FutureAdvisor, which was acquired in September by BlackRock Inc., the world's largest asset manager. FutureAdvisor has managed more than $700 million in client investments since it launched its managed service in 2013. Its innovative, always-on technology is guided by a proprietary algorithm, and its investment decisions are backed by theory developed by Nobel Prize-winning economists and continuously refined by a council of notable scholars and finance experts.

“We started looking for a simple, highly automated sophisticated technology to drive advice for our tech-savvy customers,” BBVA Compass Director of Digital Consumer Segments Jorge Möller told Forbes after the alliance was announced. “We felt FutureAdvisor (was) the best team to offer investment management solutions to help our clients realize greater control of their finances.”

Möller, in further comments to American Banker, elaborated on the bank's choice of FutureAdvisor: "One key piece is we thought they were doing a good job at communicating with customers," he told the publication. The app sends text or email notifications, for instance, every time there's a change on an account.

BBVA Compass clients will be able to link external investment accounts with FutureAdvisor and receive a customized plan for their portfolios. FutureAdvisor's investment management service will also be available for clients who want direct management of a portfolio, with the assets being held through the bank's broker-dealer affiliate BBVA Compass Investment Solutions, a division of BBVA Securities Inc., member FINRA and SIPC. The service will include auto-rebalancing based on market movement and tax loss harvesting to help improve after-tax, risk-adjusted rates of returns. 

“We have a lot of confidence in this collaboration, with our technology offering personalized financial solutions and BBVA Compass' emphasis on a best-in-class client experience," said FutureAdvisor CEO Bo Lu. He told Investment News that the partnership marks “a really big watershed moment, not just us as an entity but for the broader financial services industry as a whole” because it brings together the best of both worlds.  

FutureAdvisor is the latest innovator to join forces with BBVA Compass in the bank's pursuit to lead the technology-driven transformation of the financial services industry. In 2014, its parent company, BBVA, acquired Simple, a Portland, Ore.-based company that has created a new standard in digital banking. And through its alliance with the all-digital payments network Dwolla, the bank is helping account-holders bypass conventional networks to send and receive funds instantly.

It also is the latest in a series of BBVA Compass offerings designed to give clients greater control of their finances. In November, via the second release of BBVA Wallet, BBVA Compass became the first major U.S. bank to offer its credit card clients real-time redemption of rewards earned on qualified purchases made at any retailer. And in September, the bank introduced its ClearSpend prepaid card with a mobile budgeting app, a nod to the increasing use of prepaid debit cards across all ages and income levels. 

FutureAdvisor was awarded the World Economic Forum's Technology Pioneer award in 2015, and Euromoney's Best American Wealth Management Innovator award in 2014.