St. Louis, Missouri-based Plancorp has launched hybrid-robo advisor Brightplan for which it plans to add environmental, social and governance (ESG) portfolios by the first half of 2018.
In May, $3.9 billion Plancorp was partially acquired by wealth-tech company Prumentum Group. Plans to launch Brightplan in conjunction with the human component of Plancorp followed soon after.
With BrightPlan, clients are able to choose whether they want a digital-only service or hybrid service which is coupled with the planning capabilities of 20 advisors from Plancorp.
The robo-service went live on November 1. The financial planning component costs $20 a month and has no minimum investment. The hybrid service requires an investment account, with a minimum account size of $50,0 and a 0.50% charge on assets over $50,000.
‘We are trying to differentiate by offering access to funds that were traditionally only available to people who worked with an advisor and had $1 million minimums,’ said Peter Lazaroff, co-chief investment officer of Plancorp and Brightplan.
The platform has 11 risk-based portfolios which range from 0% equity allocation to 80% equity allocation and use investment options selected by Lazaroff.
Model portfolios are assigned to clients based on their risk score, time horizon, age, net worth and goals. Underlying funds within the portfolios are all passive solutions provided by Dimensional Fund Advisors (DFA) and Vanguard.
‘I think cost is going to be the most important thing because we have been applying the value and size strategies in passive, low-cost and low-turnover stock strategies since we started managing money in 1994 so there hasn’t been much deviation,' said Lazaroff.
‘When things are under 50 basis points, I am faster to engage with the product and learn more.'
The next step is to launch ESG portfolios, which are slated for the first half of 2018. Lazaroff said DFA's social responsibility products and sustainable portfolios in addition to the Vanguard FTSE Social Index fund seemed like likely candidates so far.
He added that Bridgeway has a small-value quantitatively-driven strategy, which looks like it may complement the service as well, adding that it donates half of its profits to charity.
‘What we don’t want to do is sacrifice risk/return characteristics or harm someone’s long-term goals, so there’s a balance between letting someone have something aligned with their values and making sure that they get the type of advice they need to meet their goals,’ said Lazaroff. ‘What we will have here is what it means to be a socially responsible investor to us.'
Plancorp’s history dates back to 1983 when it began as one of the first fee-only financial planning firms. BrightPlan is a registered investment advisor.