Is Wealthfront about to crack the 529 college-savings plan market? The website Savingforcollege.com found a public meeting notification from the state of Nevada to “review and approve” the “Wealthfront Private Label Product Agreement between Wealthfront and Ascensus to launch a new Section 529 college savings plans.” College savings plans are a natural fit for an automated investment platform like Wealthfront, with long-term investment horizons and a need to change a portfolios risk profile over time. But they are difficult for all but the largest asset management firms to crack, as they are licensed by individual states and offer, to varying degrees, state tax incentives to investors. Ascensus is the largest plan manager and record-keeper to for 529 plans, with over 31 plans across 17 states and over $71 billion in assets under administration through 3.5 million accounts. According to Savingforcollege.com, Wealthfront would be the first independent robo to offer 529 plans.
A New Technology Platform for NAPFA Members
In an effort to provide advisors with new tools to target prospects online, NAPFA (National Association of Personal Financial Advisors) has launched an alliance with GuideVine, an online platform that serves as a digital marketing partner for wealth managers. One notable feature the platform includes is the ability to broaden the reach of your message to attractive demographics. Through the alliance, NAPFA advisors will receive access to a discounted rate for onboarding services. "With the increasing number of investors who look for a financial advisor online, the advisor's digital presence is hugely important," said NAPFA CEO Geoffrey Brown. "GuideVine can make it easy for advisors to get started and can help those who are already online enhance their presence."
Millennials Suffering 401(k) Leakage
Millennials are having difficulty not just investing in their 401(k)s but keeping the money in the account when they change jobs. According to Forbes, of the 5 million people a year who change jobs with less than $5,000 in their 401(k)s, only roughly one in 25 actually transfer that amount over into a retirement account with their new employer. The temptation to spend that money, not to mention the hassle of the required paperwork, is simply too great. The article posits that creating a system that automatically ports existing retirement funds over into a new 401(k) when an individual changes jobs could generate more than $125 billion in new retirement savings for the current generation over the next 40 years.
Robos Won't Work for Mass Affluent Baby Boomers
While automated advice platforms may work for millennials, who are just starting to accumulate, they won’t work for mass affluent baby boomers who have more complex financial situations, argues Skip Maner, General Partner at NewSpring Capital in an article on TechCrunch.com. These investors need a human advisor to take personal goals into consideration and factor in such things as life insurance or tax planning. Personalized wealth management is what differentiates a human advisor, Maner argues, from goals-based software, although it is a growing trend. The advisor still provides the personal touch, while the technology “empowers the advisor to help navigate their clients through myriad life events and market outcomes.” Such goals-based technology needs to become more sophisticated, however; it’s difficult to simulate infinite life scenarios that an investor may deal with. “By bringing together a technology-driven model and a human-advice element, wealth managers are able to offer a more holistic approach to wealth management,” Maner writes.