Date: 23rd June 2017

Blackrock, the American global investment corporation acquired a €30 million stake in the European Robo-Investor Scalable Capital. The giant asset manager joins two others investors, Holtzbrink and Tengelman, in the last funding round by Scalable Capital. 

In 2015, Blackrock bought the US Robo-Investor FutureAdvisor which also uses ETFs (Exchange-traded Funds) to build portfolios for clients.  Since its acquisition by BlackRock, FutureAdvisor’s assets under management has increased from $232 million to $969 million and the number of clients has grown from 3,460 to 13,751 in 2017. 

In a more restrictive regulatory environment with pressure on fees, this investment in Scalable Capital is part of BlackRock’s strategy to increase its digital presence and to gain more market share via those digital advisors. When BlackRock bought FutureAdvisor in 2015, it was a way to ensure that FutureAdvisor would be its primary distributor of its funds to the general public, and in particular to the young generation of investors who are keen to use digital means to find investment advice and to invest.

BlackRock is now arriving in Euro-Robo-Land...

In its report published in June 2017 on Robo-Investing, BETTER FINANCE points out that Robo-Investing could lead to significant benefits for European individual investors since Robo-advisors provide lower and more transparent fees ( based on a fee-based business model rather that commission-based model). 

The report also carries a caveat pointing at the fact that well-established financial institutions are encroaching on this niche market by either creating their own robo business or investing in robo start-ups, as outlined above. A real threat to the sector exists and established players could very well partially or totally strip it of the key benefits it currently provides to EU savers and individual investors.

Read the Financial Times and New-York Times articles here and here