Firstly, software optimizes advice by automating the planning and investing process for a plan participant. Software can gather all the relevant personal and financial information necessary to create a personalized recommendation for each individual. This includes aggregating financial accounts, contribution rates, tax types, age and marital status, among other bits of information, to create a holistic understanding of each individual.

Furthermore, financial software provides the ability to build and invest in a personalized portfolio for each individual based on the investments available in their plan. The automation made possible by software provides a scalable solution for advisors, allowing them, ultimately, to advise more clients.

Additionally, software plays a vital role in the ongoing solution for the client. The key for retirement investing is not simply what’s in the best interest of the client at the time of enrollment, but what’s in his or her best interest on an ongoing basis. To that end, technology can perform portfolio rebalancing along the investment horizon of an individual, easily update savings rates and execute any other changes to the clients’ retirement plan.

Finally, new technology provides scalable control for advisors. From a regulatory perspective, auditing capabilities provided by new financial software allows advisors to create reports that document advice provided at any point in time, as well as give the reasons it was provided. Ultimately, the consistent process for the way advisors are able to plan, dispense and update investment advice with new technology creates numerous efficiencies that will enable them to grow their client base while providing more personalized, holistic advice.

The new category of digital advice companies is paving the way for an era of innovative solutions in the asset management industry. Through the power and scalability of software, it is now possible for every individual to receive a truly personalized financial plan and portfolio at roughly the same cost as investing in a target-date mutual fund. That is a quantum leap forward in the democratization of the asset management industry and a big disruption in the making.

Dirk Quayle, has been President of NextCapital for 15 years, working with large retirement plan providers and asset managers to develop and deploy personalized investment strategies and outcomes for investors. Previously, Dirk was a director at Deutsche Bank Securities. He has a BBA in finance from the University of Iowa and is a CFA.

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