Robo Tontines

Robo advisors provide financial advice and manage investment portfolios, using online software. However, they often do not give advice concerning the decumulation phase of retirement planning. Tontines are financial products that provide a stream of income for life in retirement and serve as an alternative to annuities. They are an old product that fell out of favor but is making a comeback. They differ from annuities because they are not guaranteed and, therefore, incur lower costs. The benefits they provide vary over time depending on the mortality experience of the members and the financial market experience of the investments. This article proposes a combination of these two innovative products in the form of a robo tontine—that is, a tontine provided by robo advisors. We argue that robo advisors would be well suited to provide tontines for both supply and demand reasons. They are skilled in developing and managing financial products, and they have clients who will need help with the paydown phase of their retirement investments.