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Interview with Bo Lu, CEO of the company using Robo-Advisors to apply investing principles to client portfolios


When you start trying to predict the market, risks become a huge factor. Sure, what if it pays off big? What if it doesn't though? While there is a place for risks, it's not always the right answer when investing your hard-earned money. There needs to be balance, and that's where a company like FutureAdvisor comes in.

You see, your investment accounts work better when they work together, and FutureAdvisor understands that. They use robo-advisors and real people to gain a holistic view of your accounts in order to best invest your money. There are so many more layers to it, however, and we had a chance to talk with Bo Lu, of FutureAdvisor, to explain how FutureAdvisor works, what robo-advisors are, and the future of the company.

Check out the interview below!



Care to introduce yourself and your role with FutureAdvisor?

Hi, I'm Bo Lu, CEO and Co-Founder of FutureAdvisor. I've taken on a lot of roles since our early days, from earning my Series 65 and helping create the investment model, to building the product, talking to customers, and identifying new avenues for our technology to be used via partnerships with other large financial institutions.

These days, I focus mainly on defining our new partnerships and guiding FutureAdvisor through a period of rapid growth as we continue to integrate with BlackRock.


For those unfamiliar, what is FutureAdvisor?

We're what's known as a Robo-Advisor -- a term that describes companies like ours that use technology to aid humans in applying time-tested investing principles to clients' portfolios. Our portfolio management team works in tandem with our algorithm to manage clients' portfolios.

We don't try to predict the market, but instead use the algorithm to diligently apply the time-tested principles of good investing to client portfolios. The algorithm helps us rebalance accounts, reinvest cash intelligently, place assets into the right type of account for their tax treatment, capture tax savings via "tax loss harvesting," and so much more.

We began by offering our service directly to consumers, and have expanded into a business-to-business model as well. We were acquired by BlackRock in autumn 2015, enabling us to leverage BlackRock technology (analysis, educational materials, etc) to strengthen our product and our partnerships.


What inspired the creation of FA?

I've always been interested in finance, even before I opened my first Roth IRA with money from my first summer job. Because of this, I quickly gained a reputation as the finance nerd among my group of friends in college and afterwards. Once my friends started earning their first "real world" paychecks, they found themselves with lots of questions -- "how much should I be saving?" "What do I invest in?" Some tried to visit traditional financial advisors, but found that their budding life savings didn't yet meet the advisors' minimums.

So, they turned to me for help. I shared my spreadsheets and tools with my friends, and realized that it was really easy to share and implement good financial advice at scale with the help of technology. My cofounder Jon and I created a tool where DIYers could get advice on their investments, and those who prefer to hire us to manage their money could do that as well.

Who is FutureAdvisor meant for?

FutureAdvisor is meant for anyone looking for better financial outcomes. Technology helps us to apply good investing and wealth management principles to client portfolios every day, which is difficult for individual investors to do on their own.

Our clients have a wide range of "investing savvy" -- we try to make what we do easy to understand even if you don't have a finance degree. Some of our clients choose us because we help them manage everything in one place strategically. Others who have a passion for investment strategy choose us because of the particularities of our approach, like the ways we evaluate funds, or how we apply automatic tax-efficient asset placement (which means that we put income-producing assets like bonds and REITs in tax-sheltered accounts whenever possible).

In the last year we have partnered with a series of retail banks and wealth management firms to make customized versions of the FutureAdvisor platform available to individual investors via their existing banking or wealth management relationships. Each offering is unique to the investment model of the individual partner. Delivering automated investment advice in this way leverages the efficiency of a single sign on process, linked to existing banking or investment accounts, and encourages new investors to get started building wealth with an organization that they know and trust.

What sets you apart from other robo-advisor firms?

One major distinguishing factor for us is our focus on working with human advisors. We've had a team of advisors on staff since our early days, because we realized that many investors like talking things through with another human. We've also focused heavily on aiding traditional (in-person) financial advisors in our partnership efforts, believing that technology frees them from day-to-day routine work and allows them to spend more time doing what they do best -- talking to clients about their dreams, fears, and goals.

We're also unique within the space since our roots are in our direct-to-consumer business, but BlackRock has given us powerful resources and stability to capture many business-to-business opportunities as well. At its core, BlackRock is a technology company; and FutureAdvisor is a technology offering, much like company's flagship risk analysis tool, Aladdin.


What differentiates using a robo-advisor from a classical financial advisor? Do you see customers sometimes using both?

I'm excited by how many opportunities there are for consumers in the current market. While historically we've served investors who prefer a self-serve digital approach, we've come to find that many others value the human element of having someone explain investing to them. We've always offered consumers the best of both worlds, with a digital-based experience and human advisors available anytime to discuss a client's goals and investment decisions.

We're continuing this approach in our partnerships, and seeing some traction. We're focused on maximizing efficiency as there are only so many hours in the day for advisors to speak with clients, create reports, and trade in their client's accounts. Our solution helps advisors with the legwork, which frees them up to do what humans really excel at -- talking to each other.

Anything exciting coming to FutureAdvisor in the near future?

We're excited to leverage more of BlackRock's powerful analysis and technology to grow our existing partnerships and create new ones, creating even more ways in which consumers and advisors can adopt our technology. BlackRock has so many teams of great thinkers who are coming up with better ways to analyze and understand the markets, construct clever portfolios for clients, and visualize and communicate our work -- we're excited to put that powerful information into practice.

We'd like to thank Bo for taking the time to answer some of our questions. FutureAdvisor was founded in 2010 and is headquartered in San Francisco. To learn more about FutureAdvisor click here.