March 25, 2019

Robots Can Manage Your Money. But Even They Need Humans.

With most of its customers being over 50, Vanguard has plans to introduce a tool to help people better estimate their health care and long-term care costs in retirement. It is also testing other new features in areas where it is lacking, including a “What if?” tool that lets you see how various factors affect your savings.

Schwab, with $33 billion in assets, introduced its own digital service three years ago. The firm added an online service with a human financial planner last year; it costs 0.28 percent of assets, or about 0.42 percent of assets when the cost of investing is included. (Schwab’s advisers are salaried and act as fiduciaries, meaning they promise to put customers first.)

The tools are comprehensive: Planning for college? You can pull up the actual costs of a specific university, estimate what percentage you expect to pay and plan around that goal with a 529 account, even if it’s not held at Schwab. Selling your home in retirement? It can estimate how much you expect to clear, and how that might factor into your planning.

Schwab’s investment recommendations were criticized when the firm introduced its online service, in part because of its allocation to cash — a larger slice than many financial advisers recommend. The cash component makes money for Schwab, which earns revenue on the difference between the interest it pays to customers and what it can earn on that money invested elsewhere.

There are many others that provide distinctive services. Ellevest, which focuses on helping women and is run by the former Wall Street executive Sallie Krawcheck, now offers a premium service that goes as far as providing career coaches. Then there’s Wealthsimple, based in Canada but available to customers in the United States. Its premium “black level” service includes access to airport lounges. Rebalance provides advice largely for those over 45, while Personal Capital is an established player that describes itself as a “bionic adviser” — and carries higher fees as a result.

There are also, of course, the human-led practices, more of which offer advice with flexible price options, including monthly subscriptions. And if robots and humans can keep playing nicely, even more people who don’t have piles of money will be able to get affordable financial advice.

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