Should Robots Run Your Retirement Portfolio?


For Jon Stein, CEO of robo-advisor firm Betterment, the answer is a resounding “yes.” Robo-advisors are algorithms that recommend investments based on one’s investment preferences, risk tolerance and financial goals with minimal human interaction. Using this technology, robo-advisors cut the cost of traditional wealth management to the masses.

Stein talked about this rising trend in the investment management industry on the [email protected] Show, which airs on Sirius XM channel 111. He was joined by Olivia Mitchell, executive director of the Pension Research Council, who is also director of the Boettner Center for Pensions and Retirement Research at Wharton. An edited transcript of the conversation follows.

[email protected]: When we’re talking about investing and people saving for retirement, would you say that we shouldn’t be surprised to see more use of robo-advisors and technology?

Olivia Mitchell: Absolutely. We have the software now, and most people have some access to the internet through phones or laptops or what have you. And these are hard problems: figuring out how much to save, where to invest, and what to do with your money in retirement. So we could use help.

[email protected]: How quickly is the financial industry coming along right now with the use of technology?

Jon Stein: What we’re seeing is incredible growth. … We now manage over $8 billion for 240,000 customers. Our growth path over the past few years has been faster than the growth of mutual funds, faster than the growth of ETFs — even when those products were new, in their early days. This idea of technology-driven, smarter investing is really transforming the way that people think about what they do with their money. It’s taking off in a way that’s never been seen before.

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