ROBO ADVISOR: Titan startup mimics hedge fund trades, repeats mistakes of the past

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It's 2018 and startups like Titan are still launching B2C roboadvisors claiming to invent the "modern, mobile version of BlackRock". Did we forget that FutureAdvisor, a modern, mobile version of a money manager, was bought by BlackRock in 2015 for $150 million, and is now being deployed both B2C and across financial institutions? Or that SigFig (previously WikiInvest) has gone through the same pivot, and is now powering financial advisor platform CoPilot for Citizens Bank, backed by UBS. Or that HSBC just signed Marstone as its provider of similar software? Or that WisdomTree did the same with AdvisorEngine, or Invesco with Jemstep?

Titan scrapes hedge fund filings data in order to mirror their purchases into a basket of 20 stocks for the price of 100 bps per year, which is 2-4x more expensive than most roboadvisors. This was also done before. Remember AlphaClone, or Covestor (sold to Interactive Brokers), or Motif (now sells IPOs), or Kaching (now Wealthfront)? The idea that there is a "pro-sumer" audience that wants to delegate investing a little bit, but still retain control to pick directional themes, has been repeatedly proven wrong. Having raised $2.5 million and grown assets under management to $20 million does not change the underlying issue -- the market does not exist at scale.

If you think we're being too critical, here's what appealed to token Millennial Matt Low from our team: "We are all human and succumb to peculiar logical blindness when the words “hedge fund”, “algorithmic trading” and “Mobile BlackRock” are placed together in the same article. This was particularly the case when reading up on Titan, which appeals to my mindset of supporting anything but the glass tower financial monoliths of Wall street and Canary Wharf". Fair point, Matt. But there's only so many of you to go around. To make Titan actually work, you'd need to funnel in $100 million of growth capital to acquire customers, cross-market banking, payments and insurance products, and then sell the whole mess to BlackRock.

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Source: TechCrunch (Titan), Wealth Management (SigFig), Company Websites