Leveraging “Robo-advisors” to increase savings

Interventions
Savings "Robo-advisor"
Experiment Type
Field Experiment
Goals
Save more
Outcomes
Increase short-term savings
Focus Areas
Product
Behavioral Concepts
Mental models
Partner
Retiremap
Partner Type
Fintech/tech

What Happened

The savings "Robo-advisor" prototype has not been tested yet. After the roll-out process, the impact can be measured. Afterwards, experiments can be run to optimize the experience for employees.

Lessons Learned

No lessons to be learned at the moment. After the roll-out process has ended, only then will it be possible to measure the impact of the Retiremap system.

Background

Researchers have shown that one of the most effective tools for changing financial behavior is financial coaching. However, scaling one-on-one interactions is difficult and expensive.

Many individuals are now using “robo-advisors” as an alternative to traditional investment advisors. In Silicon Valley, automated financial management services are the new “it” technology. Last year, “robo-advisor” firms raised nearly $300 million in venture funding. Thousands of people are working to optimize algorithms that identify the best financial recommendation for each person.

While these optimization efforts are worthwhile, we believe that the average American needs less advice on investing and more help with saving. Therefore, a more impactful approach would be for firms to focus less on investing technology and more on the psychology behind the “robo-advisor,” to address the underlying money issues that prevent people from saving. The big opportunity that firms seem to be missing is how to leverage the idea of a uniquely qualified advisor in order to help people make real progress on their financial goals.

We partnered with Retiremap, a fin-tech financial coaching startup, to develop a scalable and effective “robo-advisor.” We created a prototype that helps users achieve their financial goals by harnessing behavioral insights around accountability, goal creation and progress, confidence and mental accounting.

By matching users with a financial coach, we were able to maintain the human element of financial coaching, while using behavioral economics in the many automated, personalized email, SMS and in-app communications. This combination of behavioral economics and automated technology is what enabled Retiremap to deliver a scalable financial coaching program at an affordable price. This will increase access to one-on-one coaching for the populations that need it the most.

The Retiremap System is a multi-year intervention that kicks off with an initial eight week program. It is sold and delivered by some of America’s leading retirement plan advisors. RetireMap is rolling out our prototype to employers, asset managers and financial advisors. After the roll-out process has ended, we will be able to measure the impact of our Retiremap System, as well as run experiments to optimize the experience for employees, so that they make even greater progress on their financial goals.