Are there benefits to working with robo advisors?

Are there benefits to working with robo advisors?


Robo advisors may typically be viewed as a safe, low-cost solution for retirement savings, but if anything was universally beneficial, there wouldn’t be so much chatter about the pros and cons of using such a product. And there’s been plenty of recent chatter surrounding robo advisors.

But let’s backtrack for a minute.

A recent study by the Betterment for Business uncovered confusion, fiduciary responsibility, fees, and education as ongoing issues surrounding retirement savings and retirement savings accounts, like a 401(k) [1]. While this may be an accurate assessment, it’s certainly not a new revelation for anyone close to the market or industry. The article goes on to discuss how digital resources could be a potential fix to all of these concerns, yet they don’t reference any human interaction. But why would a plan sponsor want to run something as human-centric as a retirement plan using non-human “robo advisors?” What makes the most sense?

Does it make sense to use a robo advisor for a 401(k) plan?

While the article itself never mentions utilizing robo advisors to help plan participants prepare for retirement, the study does report that 70 percent of employees think that digital tools would increase the likelihood of them engaging with their 401(k) plan and that the tools would make it easier for them to invest in retirement [1]. What the study neglects to mention, however, is that there are no one-size-fits-all-solutions to retirement savings, and the best way to reach the retirement each individual participant has always dreamed of is to put a unique plan in place to reach those goals. A human element can be helpful since each individual situation is different – and what works for one likely won’t work for all.

The article also fails to mention that there are other products and services on the market that address the retirement savings issues outlined in the study—and at least one of those other services includes human interaction. Enter CoPilot.

How CoPilot can help solve common retirement concerns

CoPilot utilizes real people—not robots—to help solve common retirement concerns, ultimately putting participants on the road to retirement readiness. Let’s see how CoPilot measures up to the major retirement concerns many workers have as outlined by the study.

· Confusion

No doubt. We totally understand that people are confused about how much retirement they can afford and how long their retirement savings will last. Charts and graphs explaining fund growth and interest rates can cause confusion and may not help you conceptually visualize how many years you can afford to be retired, but CoPilot breaks down account balances differently.

In fact, being able to understand what account balances really mean was one of the core principles that led to the development of CoPilot and is one of the main reasons why we discuss retirement exclusively in years. No fancy pie charts, no confusing and irrelevant growth statistics – just the years of retirement you’re on track to have versus the years you want. We use this information to help participants bridge the gap—utilizing both our cutting-edge recordkeeping technology and our award-winning customer service.

· Fiduciary responsibility

While employees may not need to fully understand the varying levels of fiduciary responsibility, their employer needs to be aware that they’re never completely free of responsibility. However, CoPilot has the ability to dramatically reduce the plan sponsor’s investment fiduciary responsibilities and address any concerns about the overall fit—which is just one key difference between a robo 401(k) product and a retirement service.

· Fees

CoPilot is completely transparent with fees—before you've even selected to use the service. Did you know that many fund companies that are utilized for retirement savings plans pay a fee back to the plan’s recordkeeper? Typically these fees stay at the recordkeeper level, but not with CoPilot. PAi takes these fees and distributes 100 percent of revenue sharing received from funds back to the participants—right where they belong.

· Education

This is where CoPilot really sets itself apart. We've partnered with a registered investment adviser firm (eRIA) to help partcipants understand their investment risk level and how the various investment options may impact their years of retirement. And while many have taken an approach that dumps all of your money in just a few funds or, possibly even worse, uses computer algorithms to eliminate human interaction, that’s not CoPilot’s style. eRIA’s team of licensed investment advisors is on hand to assist you with investment education that can make reaching your retirement goals a reality.

Each person’s goals for retirement are unique, so it hardly makes sense to utilize a 401(k) plan that views every retirement in virtually the same way. But with retirement services like CoPilot, you’re provided with a familiar, intuitive, online-driven interface—plus you’ll get answers to customer service questions from a real person. Every time.

Confused? Not a problem. Have questions? We can help. Looking to educate yourself about your retirement? We'd love to chat. Call us today: 800.236.7400.