Recently, the financial services corporation, Ally Financial Inc. (NYSE: ALLY), revealed that it has entered the wealth management advisory services space through its online brokerage and wealth management arm, Ally Invest.
The news, however, failed to impress investors, as shares of the company declined by almost 5.6% to close at $38.85 during yesterday’s extended trade.
Strategic Impact
With roughly 15.5 million U.S. households not meeting the minimum threshold of $250,000 of investible corpus required by most wealth management advisory firms, Ally’s combination of a blended advisory fee of about 0.75% to 0.85% and a reduced threshold of $100,000 makes it an attractive offering for customers. Furthermore, the expert team will be armed with behavioral finance insights that would make their advice more personalized.
Initially, the service will be available to existing Ally Bank and Invest customers only, with a general public release planned in the later months.
Management’s Commentary
Senior Director at Ally Invest Advisors, Nicole Cope, said, “Our human-centric, behavioral approach to the client conversation aims to disrupt the industry. We look beyond the individual’s assets and get to know them as people with particular wants and needs and who come with a host of experiences that shape how they make financial decisions.”
Stock Rating
Consensus among analysts is a Strong Buy based on eight Buys and two Holds. The ALLY average price target of $52.41 implies upside potential of 34.4% from current levels. Shares have declined 26.9% over the past year.
TipRanks Website Traffic
TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Ally Financial’s performance this quarter.
According to the tool, the Ally Financial website recorded a 34.30% monthly rise in global visits in April, compared to the same period last year. Moreover, year-to-date, Ally Financial website traffic increased 21.03% compared to the previous year.
Conclusion
Ally Financial’s entry into a new and dynamic vertical like wealth management advisory can make it a one-stop shop for all the financial needs of its customers. Furthermore, the lowering of the investible corpus threshold is expected to help the company attract new customers for its new business.
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