How well does your bank understand its clients and their financial needs? Unfortunately, this answer is increasingly becoming “not well”. With the rise of online banking, person to person interactions between bank and client have fallen dramatically over the last two decades, and as a result, banks have lost valuable insight into their clients' life events, monetary goals, spending patterns, and time horizons.

So how can banks regain valuable data about their clients without losing the efficiency and convenience of online banking? The solution: robo-advisors. Although a wealth management service, robos provide a valuable information solution for banks. The reason for this is because unlike digital banking, robo-advisors are built to: 1.) be a continuously engaging touch point with clients, and 2.) collect a wealth of insightful data about their clients financial situation.

1). Robo-advisors provide a trusted and continuous touch point between bank and client.

Attaining a client’s holistic financial picture can be difficult for banks, as clients often shy away from voluntarily sharing information - unless they see it as either a necessity or benefit. However, for robo-advisors, attaining client data is not a problem. Robo-advisors need data about their clients to design portfolios, and additional client information helps robos improve their portfolio recommendations. Clients of robo-advisors are willingly to share their personal data as it will aid the robo in helping them achieve their financial goal(s).

2.) Robo-advisors inherently collect a wealth of insightful client data

Client data typically collected by robo advisors includes:

• Life event goal(s)
• Income level
• Marital status
• Net worth
• Outside accounts
• Age
• Volatility tolerance
• Employment information
• Time horizon
• Asynchronous dialogue
• Spending habits
• Charitable causes

All of the aforementioned data, can be refined and the insights transmitted to the appropriate department of the bank. Insights can be used to construct client profiles, provide targeted product recommendations, develop marketing campaigns, and design product offerings.

Let’s say one of your clients is investing for a down payment on a home she plans to purchase in three years. With a robo-advisor, not only are you alerted to this critical piece of information, but you are also informed about her saving schedule and overall financial picture. Your bank now has an information advantage. A bank’s retail mortgage brokers can utilize this information to provide proactive tips and offer the appropriate product before competing lenders are even aware of the opportunity.

Knowing your customer’s life event goals and financial circumstances allows your banking team to exceed customer service expectations and generate targeted sales opportunities.

To remain competitive, banks will need to truly understand their customers and proactively deliver products. Robo-advisors provide an avenue to better collect and distribute client data, allowing a bank to compete against peers and disruptive fintech entrants.

Interested in offering a robo advisory solution for your banking institution? Learn more about Polaris Digital Advisor.

The gig economy is growing rapidly in the United States, and with it a mounting retirement crisis. Today, seventy-percent of all independent contractors report having no long-term retirement savings. If that percentage remains constant while the gig industry’s growth projections hold true, by the year 2020, forty-percent of the American workforce will be employed in the gig economy sector, and forty-two million Americans will have inadequate retirement savings. Due to the nature of their employment status, freelancers are unable to participate in defined contribution/benefits plans to which W2 employees have access. This, coupled with a historic lack of financial education and unawareness of alternative retirement savings options, has resulted in an impending retirement disaster.

Although alarming, the looming retirement crisis can still be solved. Ironically, the same type of disruptive technology that has allowed the gig economy to flourish can also be utilized to help solve the retirement needs of its workers. Digital wealth management services, commonly referred to as robo advisors, offer low-touch algorithmically derived financial planning and investment management that is optimized for scale, fees, taxes, and a client’s personal financial situation. These characteristics make robo advisors ideally situated to solve the retirement challenges that face freelancers.

Unlike W2 workers, contractors inherently cannot participate in defined contribution plans. This prohibits freelancers from scheduling payroll deductions and reaping the associated tax benefits. Robo advisors in partnership with gig economy firms can provide auto deposit features to workers and tax efficiently manage their portfolio.

Historically, 1099 workers are unaware of their unique retirement account savings options, such as Simple IRAs, SEP IRAs, and Solo 401(k)s. Furthermore, workers are unsure of how to best approach and prioritize their financial goals. Robo advisors can provide easily accessible personal finance webinars and online finance education courses. As robo technology continues to evolve, robos will be able to recommend the most appropriate financial goal and retirement account for a worker based on their entire financial situation.

Typically, contractors’ seasonal, fluctuating, or irregular income streams make it difficult to set aside money for retirement. Algorithms employed by robo advisors can analyze the patterns and trends in a contractors’ earnings and provide auto deposit / retirement goal recommendations. Furthermore, they can let contractors know how much they should be saving and if they are investing correctly.
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For years, independent contractors have been undeserved by the financial services industry. Robo advisors’ low to no account minimums allow almost all contractors to participate in retirement planning and access professional investment management. Just like how the disruptive technology of gig economy jobs has reshaped the workforce, the technological innovations of digital wealth management services can reshape their retirement landscape.

Are you a gig economy firm interested in providing wealth management benefits to your employees? Please click here.