Despite the growth in the number of robo-advisors and the size of assets they control, many investors are unfamiliar with digital advice services. Less than half of investors with $10,000 or more in investments polled in a new Wells Fargo/Gallup survey said they had heard about robo-advisory technology, and only 5% reported that they actually use a robo-advisor.
“Automated investing tools are still in their infancy, but we expect awareness to grow quickly,” said Devon McConnell, head of Digital for Wells Fargo Advisors, in a statement. Robo-advice now is like online shopping was 10 years ago – in the early stages of adoption, which will grow as “investors become familiar and comfortable with these new ways of investing,” said McConnell.
Wells Fargo itself had previously telegraphed its intention to develop a robo-advisor capability within its Wealth and Investment Management division. The head of that division, David Carroll, said in late May that Wells Fargo planned to announce a partnership tied to a robo-advisor-type offering by the end of the second quarter.
Now that that the second quarter has come and gone, Wells Fargo could be announcing as early as next month a robo-advisor pilot that would be introduced in early 2017, said McConnell in an interview with ThinkAdvisor.
“We’re still nailing down a delivery strategy,” said McConnell, noting that the bank hasn’t decided whether to develop its robo-advisor strategy internally or in partnership with another firm.
Eventually Wells Fargo’s robo-advisor offering will be available through the 15,000 financial advisors that the firm employs – the bulk of them (13,000) working in the Private Client Group and in the Wealth Brokerage Services – and directly to consumers, who may or not already be clients of the bank.
The Wells Fargo survey found that even though many investors are not aware of robo-advisory services, 60% of those who have a personal financial advisor would like their advisor to use digital investing tools and 54% said they would trust the advice of an advisor who’s tech savvy over one who is not.