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INSURANCE

Robo-Advisor Platform for a Millennial Market


The Challenge

To offset waning growth in its retirement business, a 100-year-old Fortune 500 financial services and insurance organization decided to enter the retail investment business. The company turned to Cognizant, its long-time strategic partner, to develop a digital solution that would automate investment advice for new investors. Designed to appeal to a market consisting of about 90 million millennials, the new solution will enable the company to double its retail assets by 2020.

 


Our Approach

Cognizant invited the company’s CEO and chief digital officer to our Innovation Lab in New York for a two-day collaborative brainstorming session. We studied its existing robo-advisor products as well as the behavior of its target audience and deduced that millennials lack investment knowledge, which leaves this market segment largely under-invested. Recognizing millennials’ digital savvy and the client’s willingness to integrate an algorithmic package for customer engagement, we recommended building an omnichannel digital robo-advisor platform that would serve as a low-cost investment option.

Cognizant created an application that automatically captures information such as age, primary goals, investment amount and risk tolerance, and feeds that data into the algorithm, which then generates suitable investment recommendations. Based on the user’s choices, the system automatically sends money to the specified funds. Users can also conveniently monitor the performance of their investments through the company’s portal.

 

 

Eliminating Traditional Advisory Services to Guarantee Service to a New Market Segment

Removing the role of a physical advisor reduced the procedural time of investment from three weeks to three days and lowered expenses such as advisor fees. As a result, the company acquired 500 new customers and $25 million in assets within 60 days of the application’s deployment.

This strategy also helped the company cater to the large, yet underserved millennial market segment, whose average investments are geared less to personal advisors, who tend to focus solely on those customers with more complex investment needs and assets of at least $500,000. Using the interactive application Cognizant developed, the company aspires to acquire $200 million in assets within the first year and $2 billion in assets within next five years.

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Acquired

500 new customers and $25 million in assets within 60 days

Lowered

account establishment time from three weeks to three days

Reduced

physical advisor fees from 1.5%–2% to 0.3%–0.5%


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