Advisors, particularly those that serve the wealthy, may fear that automating certain tasks — and removing some personal contact — may alienate clients. Recent research shows that those fears may be unfounded.
More than 70 percent of investors in the U.S. and U.K. with at least $100,000 in investable assets said automated tools can have a positive impact on their wealth manager’s advice and decision making process. Respondents said automation provides a way to speed up onboarding processes, making them more convenient.
However, over half of respondents said their biggest worry regarding robo-advisors and automated processes was that their advisor could go too far in that direction – that managers might rely too much on the online tools and fail to do their own research.
Carmela Melone, analyst at MyPrivateBanking Research, said in a report that wealthy investors, as well as younger investors, “show a great openness, awareness and knowledge about robo advice.”
“Interestingly, the adoption of automated wealth advice is happening faster in the high-net-worth segment than mass affluent with current usage of online wealth management tools at 43 percent and 17 percent, respectively,” she said. “The results provide clear, empirical evidence on why automated advice and robo services are a significant part of every wealth manager’s future.”
The firm surveyed 600 affluent investors in the U.S. and U.K. for the report and found that stateside, most investors associate robo-advice with Charles Schwab. The survey was conducted in March 2016, prior to Schwab’s announcement that Intelligent Portfolios, its digital advice platforms for retail investors and advisors, reached $6.6 billion in assets since launching early last year.
The survey found U.K. investors tend to be more receptive to robo-advice. Investors there reported being willing to pay an average 10 basis points more than U.S. investors would pay for robo-advice; however, the report also found that U.K. investors would also be willing to pay more for human-only advice.
Furthermore, just 12 percent of U.K. investors said they were unlikely to use a robo-advisor in the future, compared with 28 percent of U.S. investors.
The report found financial planning and tax optimization tools were the most important value-added services to respondents. Although it may be tempting to write off robo-services as attractive to younger investors only, the report found busy self-directed middle-age investors are also ideal targets.