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Marketing Robo-Services in a DC World

Posted By Karen Witham, Monday, August 27, 2018
Updated: Thursday, August 30, 2018

By Warren Cormier, Executive Director, DCIIA Retirement Research Center

As part of my previous work with Boston Research Technologies and in collaboration with EMI Strategic Marketing, I conducted a survey of 762 DC participants on their attitudes toward robo services. Here I touch on a couple of our key findings.

Estimated reading time: 3 min 20 sec

As the move toward a technology-centric advice and service solution accelerates in the DC industry, it becomes helpful to understand DC participants’ view of robo-advice services. Like so many studies have found, in our survey we learned that not all participants are the same -- and not even all Millennials are the same. That is, there are discrete personas (psychographic segments) that exist across age cohorts in the population and each persona needs a different robo design and/or positioning.

The personas, when it comes to their view of robo services, are:

  •     Techies: Tech is safe and I prefer to use it
  •     Tech-Security Skeptics: Tech is unsafe and I prefer human assistance
  •     Tech Rejectors: I dislike tech and prefer not to use it

We recommend that plan sponsors profile their target participants along these lines to gauge likely adoption of robo solutions. To drive home this point, Techies’ likelihood to embrace technology-based advice and account management systems is twice as high (50%) as Tech Rejectors (25%).

In terms of positioning, the most important factor in picking an investment advisor is the advisor’s reputation for honesty, followed by their performance history or reputation for excellent investment results. But when it comes specifically to deciding to engage with robo-systems, the top four factors in order of importance are:

  1.     Safe and secure
  2.     Easy to use
  3.     Low cost
  4.     Good customer support

This last point strongly suggests that a system devoid of human contact is hard to sell, at least in the early stages of consumer education about the value of robo-based systems. Specifically, people are expecting that they will need human assistance when it comes to answering key questions like, “How does it work?” and “What does it cost?”

For that reason, the biggest potential improvement to robo advice services is being able to talk to a human being. Media richness theory tells us that a pop-up chat offering is far inferior to the opportunity to speak with someone on the phone. In addition, virtually all survey respondents said that they would prefer to speak to a financial planner or advisor versus a telephone representative without professional financial knowledge.

With respect to whether an expert in finance or technology is preferred, the survey responses indicate that it is more important to be viewed as having financial acumen versus technological expertise, but not by much -- 70% rated financial acumen as important, versus 61% for technology expertise. Essentially, participants are telling us that both skills must be present to be considered a viable solution.

Technology has unlocked torrents of information. And this flood is rapidly rising. We are increasingly accustomed to generating and harnessing our own data to learn new things about ourselves and the world we live in. But raw data alone doesn’t have much impact. We have to make sense of data by indentifying patterns and then using data visualization to tell stories that make the intangible tangible, the invisible visible. I invite you to consider how we might use data to tell the story of retirement savings for workers in a way that makes preparing for the future less scary, more knowable and more tangible.

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Tags:  defined contribution  robo-adviser  robo-advisor 

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