I Was a 401(k) Robo-Advisor and Didn’t Know It

Like many advisors, I’ve read a lot of articles about robo-advisors lately, and now I know: I’ve been a successful model for today’s robo-advisors since 1999.

Fifteen years ago, I began providing investment advice to individual company 401(k) retirement plan participants. I used what was then state-of-the-art investment advice technology to sort through the confusing labyrinth of a company 401(k) retirement plan menu.

I then formulated a management game plan for asset allocation and stock market risk. Next, I explained that game plan and the steps for execution in person to a current client or future prospect with a seven-figure company 401(k) retirement plan account.

Years ago, an individual company 401(k) retirement plan participant would have had to include his or her company 401(k) retirement plan account in a financial plan. That inclusion would have added thousands of dollars to the leather-bound, multi-section financial plans that I remember paging through.

The best part of all this is that I delivered my investment advice for an annual fee that would make a robo-advisor take notice. In the beginning, my company 401(k) investment advisory fees were a mere 50 basis points annually for existing clients.

How does that Barbara Mandrell song go?  “I Was Country When Country Wasn’t Cool?” I can now say the same thing about being a 401(k) robo-advisor.

I have since learned that my company 401(k) investment advice niche does not fall into the passive investment advice commodity space. My existing clients are happy to pay for quality investment advice that is specific to their company 401(k) retirement plan account menu. The same can be said for their individualized stock market risk tolerance game plan.

Independent investment advisors are capable of developing the same individual company 401(k) retirement plan participant advice niche. In fact, it’s easier than ever to put together a client company 401(k) investment advice marketing plan.

Your existing clients are likely to be more than happy to expand their current level of investment advisory relationship with you and your firm. What better way to expand that relationship to include all the household company retirement plans in your client households?

Existing clients will likely respond positively to a 1% annually advisory fee on their company 401(k) retirement plan assets. They currently pay that much or more to blindly own mutual funds that have not outperformed their asset class benchmark in several years.

Most company 401(k) retirement plan providers offer some version of an online risk tolerance questionnaire. The robo-advisors do also.