Data & Research October 2, 2018

Americans Would Like to Automate Day-to-Day Finances

When it comes to trusting a financial services firm, consumers first want it to secure their personal information; secondly, they expect it to deliver high-quality customer service.

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Charles Schwab’s new Consumer Digital Demands report, based on a survey of 1,000 U.S. consumers, finds that Americans are more likely to automate their day-to-day finances (25%) than rely on technology to get food delivered (22%), find a date (18%), diagnose a minor health issue (11%) or dive a car (11%).

Fifty-six percent would like the creation of a financial plan to be as easy as booking a hotel room.

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Nonetheless, the survey found that Americans still want access to a person, with 86% saying they prefer to work with financial companies that make it easy to interact with a person, and 43% saying they prefer human assistance over automation even for daily activities. Asked what they want help with, respondents said portfolio management or developing a financial plan. Only 16% think they can create a financial plan primarily through automation.

“So many people simply don’t invest for their future because they don’t know where to start,” says Tobin McDaniel, senior vice president of digital advice and innovation at Charles Schwab. “Consumers today expect a combination of technology to remove roadblocks and access to a person when they need some extra help—and how they invest should be no different.”

Asked what technology is likely to have the biggest impact on the future of finance, 45% said robo-advisers, followed by cryptocurrency (29%), artificial intelligence (28%), big data (21%) and virtual reality (12%). Fifty-eight percent said they expect to be using robo-advice on a regular basis by 2025, compared to artificial intelligence (55%), virtual reality (54%), augmented reality (43%) and cryptocurrency (36%).

However, even among those who express an affinity for robo-advice, 70% want help from a person for more complex questions. They also said that if they were to trust an online or mobile app, it first would need to be easy to use, followed by giving them access to a person. The survey also revealed that Americans are split between technology versus people for decision support, with 52% preferring technology to get things done, and 48% preferring interacting with another person.

When it comes to trusting a financial services firm, consumers first want it to secure their personal information. Secondly, they expect it to deliver high-quality customer service. Sixty-four percent say they would spend more time investing if they had easy access to a financial adviser.

“As people’s finances get more complex, they increasingly want access to a human adviser,” McDaniel adds. “Leveraging technology to automate ongoing tasks means we can lower costs and drive scale to give more people access to financial advice and planning than ever before.”

The survey also found that 75% of Millennials say that using technology for money management gives them peace of mind. Seventy-one percent say it has helped them reach financial goals, and 56% say it has helped them get out of debt.

Nonetheless, 82% of Millennials still want to be able to talk to a person, and 79% would like to build a financial plan through a combination of automation and personal advice.

Forty-three percent of Boomers say they are more comfortable relying on technology than people to answer questions and solve problems. Fifty-one percent say technology gives them peace of mind when it comes to finances, and 44% say it has helped them reach their financial goals.

Edelman Intelligence conducted the online survey among 1,000 adults in July.

Client Service October 2, 2018

PANC 2018: The Value of an Adviser—Plan Sponsors Tell All

Sponsors expect their advisers to be proactive and to push their plans to the next level.

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“The conversations we have with our retirement plan adviser are always about getting the plan to a better place,” said Joanna Farrere, senior vice president, human resources and administrative services at the Illinois Health and Hospital Association.

Farrere was speaking on “The Value of an Adviser—Plan Sponsors Tell All” panel at the 2018 PLANADVISER National Conference. She was invited to speak, as the Illinois Health and Hospital Association was selected as the 2018 Plan Sponsor of the Year in the non-profit defined contribution category for plans with less than $100 million in assets.

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Heather Masterson, human resources director at Hendrick Motorsports, which also won 2018 Plan Sponsor of the Year, in the corporate $50 million to $100 million category, said she is constantly receiving solicitation calls from recordkeepers and advisers. “There is a tremendous amount of interest in doing business with us,” she said. “We are constantly receiving requests to connect on LinkedIn. It can be overwhelming at times.”

Asked whether she would consider those solicitations, Masterson said, “It is all about the personality. If they make a concerted effort to know the plan or to tell me they can offer a second set of eyes to examine it,” she will consider hearing them out. “It is all about building a relationship with us.”

Farrere agreed: “Do they know who they are calling and have they reviewed all the publicly available information? Are they offering to provide me valuable information, such as a white paper they have produced, or to tell me about a new regulation that was passed?”

As to what Farrere expects from her retirement plan adviser, it is to be “a trusted source, really pushing me forward to think about new strategies and to keep our team—the recordkeeper, the committee and the auditor on the plan—together. We have weekly conversations with them about what we should be doing.”

In the case of Hendrick Motorsports, the retirement plan adviser is not the point person but part of the recordkeeper and committee team, Masterson said. “The adviser complements me very well and is extremely knowledgeable about leading trends, such as 90/10/90 [90% participation, 10% deferral rate and 90% of participants invested in a target-date fund or other balanced fund]. Our committee is asking us what we can do next, and we rely on the adviser for that.”

Farrere agreed that insights from her adviser are very helpful. For example, the adviser works with the recordkeeper and other providers to ensure that fees are reasonable, vets new options and tells Illinois Health and Hospital Association what other clients are doing. “It helps us navigate,” she said.

Winning the 2018 Plan Sponsor of the Year award has inspired Hendrick Motorsports “to look at a broader time horizon to get things done,” Masterson said. “We now have a three-year plan, and the adviser helps us prioritize all of the things on our mind. We are a high-maintenance plan and need the adviser to be flexible and agile.”

Farrere said the Illinois Health and Hospital Association especially appreciates its adviser’s recommendation to automate enrollment and escalation. “Plan design, along with education, is very important,” she said.

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