Welcome to the world of robo-advising. It seems as if millennials would prefer to avoid face-to-face business interactions when there exists a more efficient way of getting what they want accomplished.
A new breed of financial technology companies, known collectively as fintech, has taken advantage of these traits to disrupt an unexpected industry: personal investing. Just as manufacturing companies have replaced assembly line workers with robots, these companies have replaced financial advisors with robo-advisors, which use big data and algorithms to determine the best places to put clients’ money—and appeal to a whole new generation of investors. “They have a firm belief that the insights of modern technology can be competitive with someone who is personally advising you, and at a fraction of the cost,” says Luis Viceira, George E. Bates Professor and Senior Associate Dean for International Development at Harvard Business School. Viceira explores this phenomenon in the recent HBS case, The Wealthfront Generation.