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A24
BUSINESSMonday 7 March 2016
Money Matters:
Millennials hire computers to help invest their money
KEN SWEET
AP Business Writer
PHOENIX (AP) — Comput-
ers help us decide what
route to take to the grocery
store, who to date, and
what music to listen to. Why
shouldn’t they also decide
how we invest?
Younger investors, particu-
larly those born in the early
1980s to late 1990s known
as millennials, are increas-
ingly adopting apps and
what are known as robo-
advisers to make their re-
tirement decisions for them.
In the last year Betterment,
Wealthfront, Acorns and
others have brought in sev-
eral billions of dollars in as-
sets that used to be han-
dled by traditional broker-
ages or wealth advisers.
“In terms of the overall
wealth management mar-
ket, robo-advisers are tiny,
a drop in the bucket. But
their disruption potential
to traditional wealth advis-
ing is massive,” said Alois
Pirker, research director at
the Aite Group, which stud-
ies wealth management
trends.
Fed proposes rules to boost stability of financial system both with their simple in-
M. CRUTSINGER
AP Economics Writer
WASHINGTON (AP) — The
Federal Reserve has put
forward new rules aimed
at addressing one of the
primary causes of the 2008
financial crisis — the finan-
cial exposures that the big-
gest banks had with each
other.
The Fed is proposing new
limits on that exposure. It
hopes the new rules will
prevent the type of crisis
that engulfed the U.S. fi-
nancial system in Septem-
ber 2008 when the collapse
of Lehman Brothers raised
fears about the stability of

Robo-advisers are broker- popular funds targeted at adjusts the mix as the per- cessible,” said Jeff Crut-
ages that use comput- specific retirement dates son ages or if their goals tenden, founder of Acorns.
ers instead of a traditional allocate investments. The change. “The universe of investment
wealth adviser to allocate money goes into low-cost “The issue is not that millen- options is too huge. Too
customer funds across exchange-traded funds nials do not have interest in many stock mutual funds.
various types of invest- that own stocks and bonds. investing, it’s the percep- Too many bond mutual
ments, similar to the way The system automatically tion that investing is inac- funds. Too many ETFs.”
Cruttenden helped launch
This image provided by Acorns shows a screenshot demonstrating use of the company’s app Acorns, an app-based in-
that helps users with their investments. Younger investors, particularly Millennials or those born in vesting company, in 2014.
the early ‘80s to late ‘90s, are increasingly adopting apps and what are known as robo-advisers Customers choose from
to make their retirement decisions for them. In the last year Betterment, Wealthfront, Acorns and five portfolios that range
others have brought in several billions of dollars in assets that used to be handled by traditional in approach from conser-
wealth advisers. vative to aggressive and
Acorns invests in a series of
(Acorns via AP) ETFs that matches their in-
vestment style.
Acorns also helps custom-
ers squirrel away savings by
rounding each purchase a
customer makes with their
linked credit or debit card
to the nearest dollar and
investing the change. So
if you buy a $4.25 latte at
Starbucks, Acorns takes
the 75 cents and put it into
your investment account.
Cruttenden says Acorn
customers set aside $40 to
$60 a month on average
this way.
Computers are usually
cheaper than people, so
robo-advisers have been
able to attract customers
terfaces and relatively low
other banks that had made other big banks,” Yellen another financial firm of 25 fees, Pirker says.
loans to Lehman. said. percent of the bank’s total “These portfolios are priced
The central bank this week- The rules would implement capital. at a fraction of a tradition-
end approved by unani- a portion of the Dodd-Frank Banks with assets above al wealth adviser,” he said.
mous vote putting the new Act passed by Congress $250 billion would face a Betterment charges cus-
rules out for a 90-day com- in 2010 in response to the stricter limit of 25 percent tomers on a scale based
ment period. 2008 crisis, the worst finan- of the bank’s safest capital, on how much they have
Fed Chair Janet Yellen said cial crisis to hit the country known as Tier 1 capital. invested, from as much as
that the financial crisis had in seven decades. Fed Gov. Daniel Tarullo said 0.35 percent of assets for
shown that the lending that The rules would apply only that while the reforms al- less than $10,000 to 0.15
had taken place among to the nation’s biggest ready implemented have percent for more than
the country’s biggest banks bank holding companies reduced the interconnec- $100,000. A person with
had not eliminated risks with assets of $50 billion or tions between the largest $20,000 invested would
but instead had magnified more. Banks with assets be- financial firms by roughly pay Betterment $70 a
them. tween $50 billion and $250 half from pre-crisis days, year, for example. Acorns
“We are determined to billion would be subject it is still important to “put charges $1 a month for
do as much as we can to to only the minimum re- safeguards in place to help balances under $5,000
reduce or eliminate the quirements established by prevent a return to those or 0.25 percent for assets
threat that trouble at one Dodd-Frank. That require- prior practices.”q above $5,000.
big bank will bring down ment is a limit of loans to
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