BlackRock to Scrap FutureAdvisor’s Retail Business, Transfer Clients to Ritholtz Blackrock headquartersPHOTO: JEENAH MOON/BLOOMBERG By Andrew Welsch March 2, 2023 8:00 am ET BlackRock plans to close the retail business of FutureAdvisor, the robo-advisor it bought in 2015. The giant asset manager will transfer its FutureAdvisor retail accounts later this year to Ritholtz Wealth Management, a registered investment advisor firm based in New York, representatives for the companies confirmed. BlackRock and Ritholtz did not disclose terms of the deal. When BlackRock bought FutureAdvisor, it said it would leverage the firm’s technology to serve BlackRock’s corporate clients. At the time, FutureAdvisor had $600 million in assets under management, according to a 2015 Wall Street Journal article. The transfer of FutureAdvisor retail clients could give a big boost to Ritholtz’s business. FutureAdvisor had about 24,000 clients—all of them either individuals or high-net-worth individuals—and about $1.8 billion in regulatory assets under management as of April 2022, according to its Form ADV filed with the SEC. Ritholtz had about 1,700 clients and $2.7 billion in assets under management as of July 2022. The RIA also operates its own robo-advisor called Liftoff. “We are proud of having served FutureAdvisor clients over the last eight years and are confident that Ritholtz, a national, multibillion-dollar wealth management firm, has the ability to meet the demands of clients seeking digital solutions for their investing needs,” a company spokeswoman said in a statement. “BlackRock will continue to serve wealth management firms with our Aladdin Wealth technology offerings.” The spokeswoman declined a request for additional comment. For its part, Ritholtz Wealth Management says clients will have a seamless transition to the firm and get access to Ritholtz’s technology and financial planning expertise. “Ritholtz advisors and support staff are looking forward to helping them achieve success in all aspects of their financial lives,” a company spokesman said in a statement. The deal is the latest step in the evolution of robo-advisors. When BlackRock bought FutureAdvisor in 2015, the digital advice sector was populated by scrappy start-ups offering financial planning services at a fraction of a price of a traditional financial advisor. Few of the original robo-advisors have survived as stand-alone businesses due in part to the challenges of gaining sufficient scale. “Servicing small accounts with rock-bottom fees is difficult to make profitable, even when most of the servicing, advice, and trading are automated,” said David Goldstone, manager of investment research at Condor Capital Wealth Management, publisher of a regular report on robo-advisors. Goldstone said in an email that FutureAdvisor ran into the same headwinds that many robo-advisors have. “I believe costs to acquire customers have been persistently high across the industry, and with razor-thin profit margins, it has been difficult for robos to attract enough clients and assets to achieve attractive profits,” he said. “The direct-to-retail product at FutureAdvisor has long languished after the acquisition by Blackrock, and there have been few, if any, product improvements in the past few years.” Meanwhile, banks, brokerages, and other financial-services firms have bought robo-advisors or developed their own offerings. Robo-advisors are today part of a spectrum of wealth management services offered at companies such as Bank of America, Morgan Stanley, and Vanguard. And they’ve become a big business at some companies. Asset manager Vanguard’s pure digital and hybrid advice offerings now have $252 billion in assets as of Dec. 31, according to the firm. Write to Andrew Welsch at andrew.welsch@barrons.com