FOR IMMEDIATE RELEASE
DATE: January 12, 2015
Louisville, KY — The use of robo advisors is expected to explode over the next decade. SUM180 founding CEO Carla Dearing offers three reasons why 2016 will be the year of the robo advisor. SUM180 is an online financial planning service designed by women for women that provides a radical alternative to existing offerings to make financial planning easy and accessible for women.
In a recent article in The Wall Street Journal, Anne Tergesen writes, “A study released this week predicts ‘robo’ financial-advice services will manage an eye-popping $5 trillion to $7 trillion within a decade, up from under $100 billion today.” Additionally, she notes that “the term is being applied to an increasingly diverse array of companies, from all-digital services to hybrid offerings that combine computer-generated recommendations with some degree of human help.”
“The explosive growth in popularity of robo advisors is being fueled by many of the same demographic and psychographic shifts driving disruptive technologies in industries like travel, medicine and real estate, to name just a few. We’ve identified three that suggest 2016 will be the year of the robo advisor,” said Carla.
Following are Carla’s three reasons why 2016 will be the year for adoption of online financial advice and investment services:
Getting financial advice online makes sense to digital natives (young and old). To digital natives, young and old, online is a logical place to access financial advice and investment services. The services are available on demand, accessible from the comfort of their own space, and they can “Google” any questions they have, or ask their peers for advice on their social networks. In the same way digital natives will never know (human) travel agents, they are not likely to ever know the Merrill Lynch broker down the street.
Digital natives trust that the prevailing regulatory guidelines are in place as they scroll through the Terms of Service quickly to get to the “I agree” button at the bottom of the screen. The hard fought compliance procedures and protections of the past are dispensed with in a matter of seconds in the new digital age.
They are also okay with sending financial data over the internet, whether it’s “Venmo-ing” money to their friends for their share of a late night pizza or giving their bank account number to the dry cleaner for online bill paying.
Online tools allow reluctant savers, especially women, an opportunity to build a comfort level in privacy before taking the next step. On the precipice of what Edward Siedle labels, in a post on Forbes.com, the “greatest retirement crisis in American history,” 75% of Americans nearing retirement in 2010 had less than $30,000 in their retirement accounts, according to Teresa Ghilarducci, professor of economics at the New School for Social Research. Far too many people, again young and old, are ignoring the problem of saving and preparing for the future. The traditional personal advisory service model of financial services firms, even at the white-glove level, has not fueled broad adoption. Nor has decades of admonishing and cajoling people to do better with their money.
The robo advisor approach is better suited to those needing a non-threatening way to approach the complicated task of building financial security. As Millennials and other digital natives have proven, access to better information online, and a heavy reliance on advice and support from their trusted networks, provide a new way to tackle this problem.
This is especially true for women who prefer to research topics they are uncomfortable with on their own, and explore their questions and gain a basic understanding of their options before reaching out to friends and, later, advisors to move forward on next steps.
The combination of online + human advice is the better mousetrap. Money is emotional and there are always intangibles to consider in deciding what to do next. The best (human) advisers will gather all your information and then explore choices with you. These advisers will tell you that the second level, deeper questions that come up in a face-to-face follow-up discussion will be the most important for identifying lasting insights and setting priorities for a successful path forward.
Online financial services will not be able to make this emotional connection with clients, at least for the foreseeable future. Combining the benefits of online advice with human advice, however, delivers the best of both. As we’ve noted, this approach lets clients calibrate how much they want to explore on their own and decide next steps. Inevitably, there are follow-up questions, and users need to know that they will get answers as part of the service.
Further, any follow-on consultation with an adviser is fueled by a very comprehensive set of data and analysis generated from the online plan, so that the “on” time with the adviser is as productive as possible. The adviser is up to speed and able to immediately explore choices, and associated feelings and concerns to support the best possible outcome for each client.
Finally, the combined online/human service is usually more affordable than traditional services, which is another key to getting more people engaged.
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SUM180 is an online financial planning service designed by women for women. With the goal of making financial planning simple and affordable for women, SUM180 takes a radically different approach to traditional financial advisory services.
Specifically, SUM180 differentiates itself in the following ways:
- SUM180 meets women where they are. SUM180 Plans are personalized to help women wherever they are right now on their financial journey; whether they’re just beginning, starting over or well on their way.
- SUM180 plans are simple. Clients need only focus on just three of their most important next steps at any given time. This approach is empowering for most, but especially for women who have been “tuned out” of their financial picture for a period of time.
- Clients don’t need a degree in finance; SUM180 doesn’t try to give them one. SUM180 clients don’t need to become financial experts to meet their financial goals. SUM180 provides the tools they need, without overwhelming them with the details they don’t need.
- SUM180 offers a community for users, unfiltered. SUM180 offers a community forum where users can support one another in their plans.
- SUM180 serves; never sells. Earning and keeping client trust is SUM180’s highest priority. SUM180 never makes money based on the advice provided.
Additional information about SUM180 may be found at https://sum180.com/.
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Robin Schoen Public Relations