Survey: Most financial professionals don’t use robo-advisors

Nearly every day, articles about “robo-advisors” and their potential impact appear in various financial news media. Results from a new LIMRA survey of financial professionals reveals nearly half view robo-advisors as having no real impact on the industry.

Unlike robot portrayals in science fiction, a robo-advisor is a service that provides automated investment advice.  Clients provide their investment goals and risk tolerance and the robo-advisor uses algorithms to provide portfolio management advice, all without a human financial planner.

LIMRA surveyed more than 300 financial professionals from career and independent insurance agents/advisors to independent investment advisors.  Nearly 7 in 10 career and independent insurance agents are not familiar with the capabilities of a robo-advisor.   By contrast, 71 percent of independent investment advisors are familiar with them.  This dichotomy is not surprising as robo-advisors are currently used only for investment management. 

While investment advisors may be more familiar with robo-advisors, 8 in 10 are not leveraging them currently and have no plans to in the immediate future.  Among insurance sales professionals, 9 in 10 are also not leveraging and have no immediate plans.

Even though robo-advisors are still fairly new to the industry, their potential could represent opportunity for forward-thinking financial professionals and a threat to complacent ones. 

The current users of robo-advisors tend to be young and more sophisticated about investments.  To financial professionals, they also represent tomorrow’s clients.  Financial professionals who include technology driven alternatives into their practice have a better chance of retaining these new investors.