Those advisors and industry observers who downplay the importance of the digital advice players, aka robo-advisors, like to point to the relatively low level of assets held by the robos, and that the average account is far smaller than most advisors’ minimums for accepting new clients. Those skeptics might want to rethink their arguments, however, based on the findings of Capgemini’s annual World Wealth Report.
The U.S. version of the global report surveyed HNWIs — individuals with investable assets of $1 million or more, excluding primary residences, collectables and other non-liquid assets — and particularly for HNWIs under age 40, what the report calls “automated advisory services” were very appealing.
Of the under-40 cohort of respondents, 87% of U.S. HNWIs expect “all or most of their wealth management relationship to be conducted digitally” over the next five years, while 48% of those HNWIs over 40 have that expectation.
As part of the survey conducted with RBC Wealth Management, wealth managers were asked how many of their clients would use an automated advisory service, while HNWIs were asked “would you ever consider having a portion of your wealth” managed by a robo-advisor. While the wealth managers said only 18% of their clients would use a robo, 34% of wealthy individuals said they would use an automated service. And of all the wealth segments in the survey, it was the ultra-wealthy clients who were most interested in using a digital advice platform: 38% said they would do so, compared with the 34% overall figure.
When broken down by age cohorts, the willingness to use a digital advice platform was most pronounced. When asked in the Capgemini-RBC Wealth survey “Would you ever consider having a portion of your wealth managed by an automated advisory service?” only 18% of respondents over 60 said yes, while for those under 30, the percentage was 87%, and for all those under 40, 69% said they would.