As someone who considers managing his 401(k) account about as much fun as cleaning leaves out of the gutters on a drizzly day, I was intrigued by a recent article about firms that offer robo-advice – that is, individualized 401(k) investment recommendations determined by algorithm. Can the drudgery and uncertainty of picking 401(k) plan investments really be automated effectively? In the article, the author paraphrases Jon Stein, the founder and chief of robo-adviser Betterment, who asserts, “When an employer offers a retirement plan without any recommendations… it’s akin to providing a health insurance plan that lists medications without any doctors.”
It will be interesting to see if plan sponsors are ready to moderate their hands-off approach to investment advice and provide retirement accounts that can manage themselves.
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