In 2012, Susan Shaffer invested about $US100,000 of retirement savings with a robo-advisor.
The Philadelphian has been investing for over 25 years. She has worked with traditional financial advisors, directly with brokerages, and now, with online investing platform Betterment.
At age 67, Shaffer is distinctly outside of the usual robo-advice market, which generally seeks and attracts tech-savvy Millennials.
That’s not to say that Shaffer isn’t tech-savvy: She owns a suite of Apple products, favours Twitter to get her daily news, and considers herself an early adopter of new technology.
“A lot of people think I’m a little crazy because I have a lot of things online,” Shaffer admits. “It’s not really the way of the Baby Boomers. When I tell people about it, they’re like ‘I would not do that,’ ‘Where do you meet these people?’ ‘Where’s their office?’ I’m a bit of a risk taker. Sometimes it’s a good thing, sometimes not.”
In the case of her online investments, she came to Betterment through Mint.com, which she uses to manage her budget. “I had chosen a money market account that Mint had advised me to use, and I thought they gave good advice. When they suggested Betterment, I just looked and decided to try it.”
Betterment launched in 2010, meaning Shaffer was in their first wave or two of investors. While she isn’t familiar with the term “robo-advisor” (“I must have missed that on Twitter”), she did read some online reviews and about the history of the company before entrusting them with the money she’s investing for retirement.
Shaffer is no stranger to doing her research. When she first started concentrating on her money after her divorce, she went to seminars, and learned from the advice of personal finance guru Suze Orman. To this day, she regularly watches the CNBC morning news program Squawk Box to learn what’s happening in the markets. “I like to know what’s going on,” she says. “I don’t think I react as quickly as some people who just look at the numbers. There’s always a reason things are happening.”
When she came across Betterment, Shaffer was looking for a change. Years ago, she had been paying a financial planner about $US500 annually, plus commission. “I disliked the fact that they were pulling all the money out when the market went down and putting it into a money market account, and when the market went up they would buy things,” she remembers. “Then I found out what they were charging me for the transactions: $US10,000 in commission.”
Shaffer left her financial planner, and over the course of nearly three decades added Morgan Stanley, American Express, RPG, and Fidelity to the list of companies she worked with. She found that working with a brokerage directly still felt a little too expensive. “Even though everyone there was very personable and helpful, I didn’t feel that I could afford their 1% fee for the next 30 years.”
Betterment charges .15-.35%, depending on the amount of money you invest.
Shaffer, who has retired from a full-time job in the pharmaceutical industry to work part-time in real estate, finds the site intuitive. “I will get to a point where I need to take my withdrawals for retirement, and they have a tool that will set that up and direct transfer money into my checking account. I think it’s easier than some other systems, where you have to call and wait. You can do a lot of planning, change your allocation whenever you want, and go in and look at the activity to see whether you’ve gained or lost in the market.”
Despite the online interface, she finds that her “robo-advisor” doesn’t seem all that robotic. “I’ve called customer support at Betterment,” she explains, “and I usually get the same person every time. That’s reassuring — you can call Verizon and you never know who you’ll get. They have a very human feel, even through they’re all online.”
Shaffer says she would recommend an online investment service to others, but, she confesses, “I have a hard time selling it, even to family members. They think it’s scary.” She recalls that her cousin, who recommended the service that charged her $US10,000 in commission, was surprised to hear about the cost. “He said, ‘You just do your homework better than I do.'”
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