Aphrodite, a Femtech leader, has moved countries half a dozen times and maintains accounts (or trails of accounts) in each place she lived and worked at.

Three different currencies and a mix of accounts, from checking, savings, to investment accounts; comprise her financial holdings. The accounts include some passive, “hosted” under a universal bank’s non-discretionary “division”, an IRA account, and a “private banking account”.

Boy, did Aphrodite wish there was an aggregator platform at her service, to monitor and manage her “diverse” portfolio. All that currently exists is country specific and has no cross-border capabilities (am I missing a cross-border account aggregator?). Such diversification across financial institutions is typical to HNW but Aphrodite isn’t a HNW femme. She happens to be an affluent mobile professional, who has moved from intrapreneurial positions to entrepreneurial ventures. She isn’t as advanced as Andreas Antonopoulos, who over the last 3 yrs is only compensated in bitcoin while traversing the world to preach for a decentralized monetary system and against the central surveillance system that is entrenched in our financial habits.

During her recent move to a European country, Aphrodite and her husband started discussing consolidation of their scattered financial holdings. Her husband’s coworker tried to introduce them to a broker with international capabilities and Aphrodite’s female local business partner suggested a fairly globalized investment advisor. A can of worms opened up between the couple, as to which is the right and more suitable approach.

While there is no oath for brokers or advisors, like the Hipppocratic oath for physicians, there is a basic distinction between the two professional functions. Financial advisors have sworn to put their client interests ahead of their own. And particularly in the US, the recent DOL rule focused on the fiduciary duties for retirement accounts. Brokers on the other hand, have been traditionally selling products (earning commissions) and are basically constrained by suitability guidelines. So, level 1 distinction is fiduciary standards versus suitability rules. Sounds like female versus male stereotypical approaches?

In the US actually, the two functions are regulated by different agencies. The SEC takes care of investment advisors and FINRA oversees those involved in brokerage.

Aphrodite and co., are mainly focused in equity investing and trading. The couple played broker vs. advisor ping-pong conversation for a couple of days.

• Ping: Most brokers are also custodians; so they’d better be trustworthy and run a solid business. Broker blowups aren’t uncommon.
• Pong: Your advisor will have to use a custodian anyway; so we aren’t moving towards a one-shop location.
• Ping: Brokers are innovating at a faster pace and offering commission free ETFs, institutional commission levels on individual stock trades and CFDs plus many resources for self-directed investors. Why pay the professionals for investment advice that we can extract with the new financial apps?
• Pong: Advisers aren’t behaving like kids in a candy store, downloading financial apps here and there simply to offer cheap access to their clients or to impress them with information via digital media. Advisers are more sensible because they understand the complexity of customer needs. They are professionals and dedicated to this domain. Are you fooling yourself that you can compete with them? And actually, know that I think of it, “I want them to have advantages” as Matt Levine in BloombergView “Bad supervision or No supervision” argues.
• Ping: Fees have been eating into long-term returns. That’s why there aren’t enough billionaires as you would expect around. As Victor Haghani points out in his Ted Talk “Where are all the Billionaires? And why should we care?”, from the 4000 billionaires in the 1900 there are only 400 left. If only these 4000 had matched the market returns, we would have had 120,000 billionaires today.                                     How can I resist singing up for slashed equity commissions as low as 80% or for some combination of indexed investing and active rebalancing?
• Pong: Right, but do these brokers acting more as platforms with financial apps offering directly to us investment advisory tools, cover all my needs and fears? Can they hold multi-currency accounts? What are their custody fees? Do they have a dividend-reinvesting program? Can they be a one-shop place with no hidden costs?

Brokerage businesses are innovating faster because they feel the disruption threat banging on their door. Price differentiation cant remain the solid foundation of a business at a time that financial services are becoming integrated and the world is moving towards being able to offer holistic financial wellness programs.

Financial digitization is blurring the lines between brokers, custodians and investment advisor services. The established large players are already re-positioning themselves day by day, as platform businesses catering to changing dynamic customer needs. They are integrating online portfolio management capabilities (robo-advisors), content, and investment discovery tools. They are realizing that most clients can’t be canned and directed in one category, passive, active, beta, or alpha. A customer can be partly all of those; or active in one asset class and passive in another. Service has to be agile to accommodate the dynamic needs of Aphrodite and her husband, who change behavior, risk profile and therefore, their needs and expectations.

Fintechs specializing on offering freeways for equity investing are Robinhood and iDealing (coverage on Daily Fintech). These freemuim brokerage businesses are making money on margin accounts and cash balances (much like Schwab intelligent portfolios does). Schwab intelligent is currently the closest to a commission free robo advisor. Although, I sense that a standalone full blown commission free robo-service, with really no hidden costs, will sprout out of Asia. I heard on the grapevine that a brokerage collaboration is in the works with a seasoned asset management practice; the necessary basic ingredients.

Robinhood started in the US and is expanding in the UK. Idealing started in the UK and will focus in Europe. Degiro, is a fintech broker, that gives access to retail equity investors at institutional level commissions, across more than 19 countries. Their agile approach for crossing country borders, is their claim to fame.

Very few standalone robo-advisors have chosen to be both brokers and investment managers from their start. FolioFn is in the US and Swanest in Europe. Most of the robo-advisor value propositions are focused on the UX and on serving the underserved. The behind the scenes part of their businesses, which by the way doesn’t differ from a traditional service provider, has been “outsourced” often to incumbents. For example, Motif investing to Pershing for custody; and SigFig to Fidelity. Betterment and Wealthfront, on the other hand, have chosen a Fintech provider for custody and clearing, Apex clear.

Aphrodite and her husband, will ping-pong on their financial issues. We will follow them and explore with them. Their case would rest,

if a true commission free robo-advisor became available.

Will a traditional brokerage business deliver this innovation? Will a traditional wealth management business arrive first to market? Or will this come out of a collaboration of a brokerage and asset management business? Can you smell it coming?

Brokerage businesses are innovating faster than financial advisors. Customers will benefit in all possible scenarios.

Cross border aggregation of accounts is still missing. Anything brewing in Europe?

A commission free robo-advisor is still missing. Anything brewing in Asia?

Comment below on this ping-pong game and on the thoughts around it.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Efi Pylarinou is a Digital Wealth Management thought leader.