Hedgeable restructures its business; closes down retail business arm

In early July 2018, Hedgeable, independent next-gen robo-advisor launched in 2010, announced about its plans to restructure its business. Restructuring, another way of saying that they discontinue over down million AuM of automated investment accounts, was completed in early August 2018.

From the beginning, Hedgeable tried to position itself from the competition by adopting “hedge fund”-like investment management framework and publishing numerous white papers on their investing approach. Hedgeable was primarily focused on attracting mass affluent and HNW clientele.

Hedgeable emphasizes that there are no plans to shut down their operations but instead they had decided to remove their SEC registration and close down their retail automated investing business. And, as Sean Allocca at Financial Planning points out,

“But the firm had difficulty in attracting enough wealthy clients. It listed only 40 HNW clients with $12 million in assets on its latest Form ADV, filed in June. The average client account was around $47,000.” 1)Robo advice pioneer gets out of robo advice“, 12.7.2018

Some commentators have ended up drawing rather harsh conclusions on the state of (independent) digital wealth management firms based on the fact that some independent digital wealth managers have closed down. 2)Napach, B. (2018). “Robo-Advisor Hedgeable Is Closing. Who’s Next?“. ThinkAdvisor, 13.7.2018 3)As I and several other observers have argued in the past, it’s all about the business model and industrial dynamics. Not every firm will survive. There will be champs and failures.

 

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