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Santander to launch an ETF robo-adviser with SigFig


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Santander is preparing to launch a pure-play robo-adviser with SigFig, a digital adviser and technology provider, a recent regulatory filing shows.

Clients who use the robo, Santander PathFinder, will be slotted into model portfolios created by SigFig that are composed of ETFs, the bank disclosed in November. The filing did not specify which ETFs had been selected for the portfolios. However, the ETF models available will range from conservative to aggressive.

An algorithm will recommend portfolios to clients based on the information that they provide in a risk tolerance questionnaire, the filing notes.

The programme will offer a cash sweep option, through which the client’s cash is automatically invested in the $235bn Fidelity Government Money Market Fund. Santander receives no compensation from the investment, the filing notes.

This article was previously published by Ignites, a title owned by the FT Group.

A Santander spokesperson declined to comment. The filing did not state when the robo would launch.

The PathFinder service is being aimed at clients with at least $2,000 to invest, according to the filing. However, the minimum may be waived by the firm at any time.

The robo will charge an annual asset-based fee that is calculated and charged monthly in arrears of 50 basis points, the filing said. Santander will pay an undisclosed portion of the fee to SigFig. Investors will also be responsible for paying additional fees associated with the ETFs that they hold in their accounts.

The robo will not offer access to human advisers, the filing notes. However, a customer service team composed of licensed advisers will be available to answer questions.

In addition to creating the portfolios, SigFig will also implement and manage the robo’s model portfolios, the filing notes. It will also monitor and rebalance portfolios as needed, and will oversee the operation of the robo’s algorithms. And if a client elects to use the programme’s tax-loss harvesting feature, SigFig will use algorithms to analyse potential tax-loss harvesting opportunities.

SigFig works with other banks and financial institutions on robo products. Its largest partnership, with Wells Fargo, began in 2016, said David Goldstone, a manager of research and analytics at Backend Benchmarking. SigFig still manages and implements Wells Fargo’s digital Intuitive Investor programme, which also offers models consisting of ETFs, an August regulatory filing shows.

In addition, SigFig worked with UBS to develop its robo, Advice Advantage. The Swiss bank took an undisclosed stake in the company in 2016 as a part of a strategic alliance.

SigFig also has a standalone robo that individuals with at least $2,000 can access, its website shows. The robo charges a 25-bp annual fee, and clients can get their first $10,000 managed for free.

Santander Securities, the entity that plans to launch PathFinder, is a subsidiary of Santander Holdings USA. The parent is a holding company for Santander Bank.

TD Bank has also recently delved into the robo space, launching two robos in October.

*Ignites is a news service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at ignites.com.

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