New startups and major players like Charles Schwab (SCHW) are now offering greater online transparency on their pricing and fees and have invested in offering user-friendly websites and mobile apps. Traditional brokerage service companies like Schwab are now joining the sector and have unveiled a new low-cost online managed account dubbed "Intelligent Portfolios," while TradeKing, the discount brokerage firm, rolled out a new managed account service dubbed "TradeKing Advisors."
"The surge of established players entering the low-cost advice space is a major development and should raise alarm bells at full-service firms," said Grant Easterbrook, an analyst who tracks financial startups at Corporate Insight, a New York-based financial services research and consulting firm.
"Much of the coverage of these recent actions has focused on how the major hybrid players now threaten startups and will likely put them out of business. We do not view this as a zero-sum game and the 'pie' of investment dollars in the U.S. is large enough that there's room for many different online advice players," said Easterbrook.