UBS has confirmed the closure of its robo-advice platform, Advice Advantage, marking a significant shift in strategy as major Wall Street firms continue to scale back their digital wealth management offerings.
The robo-adviser was originally launched over seven years ago as part of UBS’s broader effort to attract emerging high-potential clients in the wealth accumulation phase, an increasingly competitive segment that rival wirehouses have also been targeting.
According to Barron’s, Morgan Stanley’s 2020 acquisition of E-Trade Financial brought in over 16 million prospective client leads, providing opportunities to convert them into full-service advisory relationships.
Advice Advantage was initially developed under the leadership of Rich Steinmeier, who at the time served as Head of Digital Strategy and Platforms at UBS Wealth Management USA.
Steinmeier now serves as Chief Executive of independent broker-dealer LPL Financial.
Following the launch of Advice Advantage, UBS sought to deepen its footprint in the robo-advice space with the proposed acquisition of robo-advice giant Wealthfront for US$1.4 billion.
However, the deal was mutually terminated in late 2022, with UBS instead purchasing a US$69.7 million convertible note in Wealthfront.
UBS has previously tested robo-advice models in other markets, including its UK-based SmartWealth service, which debuted as a pilot programme in 2017.
The rights to that platform were sold a year later to San Francisco-based wealth technology firm SigFig Wealth Management.
SigFig has played a central role in powering Advice Advantage, providing core technology for portfolio management, including automated rebalancing and tax-loss harvesting features.
UBS has been a strategic investor in SigFig since 2016.
Although UBS declined to disclose the current assets under management for Advice Advantage, industry publication AdvisorHub reported in early 2022 that the platform had surpassed US$1 billion in assets.
The decision to shutter Advice Advantage aligns with broader industry trends, as several major financial institutions have stepped away from the robo-advice market due to profitability challenges.
JPMorgan Chase closed its fully digital robo service, J.P. Morgan Automated Investing, last year.
Goldman Sachs also wound down Marcus Invest, offloading its customer accounts to Betterment.
Similarly, BlackRock discontinued its robo-advice platform, FutureAdvisor, in 2023, transferring an estimated US$1.75 billion book of business to Ritholtz Wealth Management.
More recently, women-focused wealth firm Ellevest divested its robo-advice business to Betterment, shifting its focus to private wealth management services.
The closure of Advice Advantage underscores the mounting difficulties faced by robo-advice platforms in achieving scale and profitability within an increasingly competitive and evolving wealth management landscape.
Featured image credit: UBS
