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More on the Goldman Sachs robo: Q&A with FinLife chief Rachel Schnoll

Goldman Sachs’ newly built robo is locked and loaded. The question is, where will its sights be trained?

Rachel Schnoll, the new head of Goldman’s RIA platform FinLife CX, has said that the firm is considering launching the robo to compete for retail clients, but it was now eyeing it as an additional tool for independent advisors as well.

“Advisors struggle with small clients and what to do with them. So one of the things that we've been thinking about adding is a robo to help advisors with their small clients. This is something that Goldman Sachs has actually built. We just haven't deployed yet,” Schnoll said at the Schwab Impact conference, earlier this month.

She also indicated that instead of piling into a crowded retail investment landscape, Goldman may instead decide to launch the robo on its FinLife platform, which came along with the acquisition of United Capital in May.

Read what else Schnoll has to say about how Goldman’s robo could help crack the mass-affluent code, about the challenges that come with the best and rarest type of client, and how investment technology is continuing to shape wealth management.

Rachell Schnoll Goldman United Capial FinLife IAG
Why is Goldman considering a robo advisor?
[It] solves a big problem for advisors. For example, take an advisor that is serving a couple with grandchildren, and that couple wants to put $20,000 in each account for their grandkids. But, does the advisor really want to manage the money in those $20,000 accounts? Probably not. So that's where we see robo being really helpful.

As those accounts grow, and all of a sudden there is a $150,000 in that account, then the advisor can take another look and graduate that client to full service.
What other tools are being launched for advisors right now?
One tool allows an advisor to send a white-labeled email to a prospect or a client and [engage in] a quick exercise that takes about five minutes. It’s to understand how the client’s brain responds to money. So questions like: If you were to win $10,000 in the lottery, how would you spend it? Would you go on a vacation? Would you put it in your child's college fund? Would you invest it in the markets?

The most common money mind[set] is protection, which means the client is scared to lose assets. The client is scared about what’s happening.

If you spend it, that means you’re a happiness [oriented] investor. The happiness client wants to spend money taking care of other people. Happiness is the rarest and probably the best. But then you have to, as a financial advisor, ask yourself: How do I work with a happiness mind? At some point, advisors have to make sure clients are also saving money and not just spending it.
How important is behavioral economics for advisors?
If you think about the way that advisors have traditionally talked to investors about money and investing, it's all about risk tolerance. It's alpha. It's beta. It's confusing.

It doesn't necessarily reflect how investors think about money. You want to get to the root of how clients actually interact with money and technology gives advisors the tools to do that in a very scalable way.
What are some of the dangers for RIAs?
RIAs need to focus on succession. And succession really comes with two components. There's succession of the business. But there is also a succession of the clients. So as advisors are preparing to pass over the reigns of their own practice, technology can create a seamless client experience that every advisor in the office can offer and have that instant infrastructure to use.