As artificial intelligence and robo-advisors disrupt the retirement savings industry, brokers and advisors need to be aware and ready to react.
“The new client has expectations of 24/7 access to information that is readily available via a smartphone, tablet or computer,” writes John Sullivan for 401(k) Specialist. ”Financial issues and questions that once required the advice of a certified professional can now be answered with a click on any digitally enabled device.”
And, robo-advisors like Betterment for Business and Captain 401k offer value to potential customers by managing savings and investments cost-effectively, writes Trevir Nath for Investopedia. It makes saving for retirement more accessible for all, he writes.
“Betterment’s service charges no upfront fees to employers with more than $1 million in assets and management fees ranging from 10 to 60 basis points,” Nath writes. “Employers can choose whether to pay the fees themselves or pass them on to employees. This makes Betterment one of the lowest costing plans in the industry. Captain 401k, on the other hand, estimates to save employers 50 percent.”
Another possible disruption: Empower Retirement, “the first Apple Watch app for retirement planning,” writes Suzanne Woolley for Employee Benefit Adviser.
“Right now, the app is more about encouraging people to track progress toward goals and increasing savings rates,” Woolley writes. “At the same time, getting savers so involved in their 401(k) that they monitor it constantly, tempting them to monkey around with allocations based on daily market movements, could seriously damage their retirement prospects.”
This is one example of why a rapidly changing industry won’t put brokers out of a job. It’s just that their role is changing — and they must understand the technology in order to make the transition.“The key is to incorporate technology in a way that enhances, rather than replaces, 401(k) advisor communication,” Sullivan writes. “Brokers are poised to be consultative partners,” writes Dayne Williams for BenefitsPro, especially in the age of technology.
“(They) must be knowledgeable of what technologies are available and advise their clients on how to automate these processes,” Williams writes. “There is no silver bullet. Brokers today must use every resource and piece of technology at their disposal if they want to remain relevant in today’s market and become a trusted partner in their clients’ quest for a better benefits experience.”