While these offerings may appear simplistic compared with the services offered by established asset managers, robo-adviosrs are attracting Millennials in droves. In a follow-up to his idea of Disruptive Innovation, Clayton Christensen put forward the idea of Jobs to be Done in his 2003 book The Innovator’s Solution: don’t sell products and services to customers, but rather try to help address their jobs to be done. This is something robo-advisors are executing relentlessly against. Millennials are cautious and responsible. Having come of age during the great recession, many entered the workforce in challenging economic times. This shaped Millennials’ two main financial priorities: paying down debt and saving for the future. Over 86% of Millennials say they are actually saving today, and robo-advisors make it incredibly easy for new users to sign up and start saving. Many platforms enable users to start saving with little more than an e-mail address. Companies such as Acorns are making saving automatic for their customers. When clients link their debit or credit card to the platform, it will automatically round up the transactions and invest those into a portfolio based on each individual’s risk profile. In addition to making the saving process seamless, many of the platforms have put a strong focus on their user experience to meet Millennials where they already are – their smartphones. Over 77% of Millennials say their mobile phone is always with them, and 49% prefer mobile banking to any other banking channel. While many traditional brokerage accounts tout having intuitive mobile applications, the reality is that these are often ill-adapted web transplants. Newer platforms built their applications for mobile first allowing them to embody Millennials’ expectations of having access to information anywhere and at any time. The experience has been simplified to provide always up to date information quickly and visually. This makes it easy for Millennials to track their money, make new deposits on the go, and receive timely updates and advice.
Robo-advisors are not only meeting Millennials’ functional jobs to be done, they are also meeting their emotional jobs to be done. In contrast to previous generations, Millennials are not saving for specific objectives such as a house, or for retirement. Instead they are saving based on profound emotional jobs – they are saving to feel responsible. 54% of Millennials say the primary reason they are saving is because they want to be responsible, while only 17% say the main reason they are saving is to buy a home, and only 8% mention retirement. Yet, while diligent and responsible, Millennials stand at a crossroads. Most Millennials feel there is more they should be doing with their money, yet many just do not know what to do. Robo-advisors help Millennials feel confident that their money is doing more than what they could be doing alone. By providing tailored information and advice based on their individual preferences, robo-advisors make Millennials feel informed and knowledgeable. Setting transparent, low-cost fees also helps instill a sense of trust – something that has been lost with larger established organizations. Finally, many robo-advisors enable Millennials to save and invest in companies that reflect their personal values. Earthfolio, for example, is a firm that provides automated investing services focused on funds that promote social and environmental progress. While traditional brokerages can feel overly complex, robo-advisors meet many Millennials’ emotional jobs by making them feel more knowledgeable, purposeful, and responsible.