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In-Person Financial Advice is Still King, Study Suggests

While emerging technologies are drastically shaping the future of financial guidance, a new report finds that wealthy Americans still value in-person knowledge and expertise for financial advice.

When it comes to making financial decisions, 81% of respondents to a recent poll of mass affluent Americans said they are most likely to turn to a financial adviser over their closest confidants, including their wealthiest friends (70%), older generations (69%), parents (66%) and friends (57%).

The online survey, reported in the spring 2018 edition of the Merrill Edge Report, polled 1,000 respondents with investable assets between $20,000 $250,000.

Despite their apparent preference for in-person advice, survey respondents indicated that they are becoming increasingly comfortable with emerging technology when it comes to managing their finances. Half said they are turning to apps for financial advice, and one in five prefer digital advice to in-person guidance.

Moreover, 40% said they are comfortable consulting artificial intelligence (AI) for financial guidance; in fact, they are more likely to trust AI with their finances than to drive a car (28%), post to social media (28%) or select a wardrobe for them (26%). The report suggests that this comfort level could be because they have already adopted and trust AI to handle most of their financial activities, including paying bills (60%), providing spending and savings guidance (45%) and making investments (32%).

“While we’re seeing rapid adoption of emerging technologies, investors truly want the best of both worlds – digital and physical – when it comes to decision-making, not one or the other,” explains Aron Levine, head of Merrill Edge.

So what does the future hold for emerging technologies? A majority of respondents believe that all financial decisions will be made with the help of technology (69%) and all money will be digital (51%) within their lifetimes. In addition, they predict that over the next 20 years the highest performing stocks will be for technologies that do not even exist yet (78%).

‘Un’-Conscious Investing

The report also found that among mass affluent investors, social responsibility and community welfare appear to be growing in importance. When choosing investments, survey respondents said they are more likely to invest in companies that:

  • pay women and men equally (87%);

  • promote diverse senior leadership (85%);

  • demonstrate a commitment to environmental sustainability (82%);

  • provide three or more months of family leave (78%);

  • support the LGBTQ community (61%); and

  • share their religious beliefs (62%).

Nonetheless, survey respondents still value financial gains over social values. Merrill reported that they said they are most likely to invest in stock based on market performance (88%), followed by its ability to pay dividends (85%). Moreover, 60% said they would be more likely to invest in a profitable company whose values they disagree with than a struggling company whose values they agree with (40%). And more than half (57%) are more likely to invest in the most profitable company, regardless of its sector, over a company with a focus on environmental assets (43%).

Conducted April 9-20, 2018, by Convergys on behalf of Merrill Edge, the nationally representative online survey consisted of 1,000 mass affluent respondents aged 18 to 40 with investable assets between $50,000 and $250,000 or those aged 18 to 40 who have investable assets between $20,000 and $50,000 with an annual income of at least $50,000; or aged 41-plus with investable assets between $50,000 and $250,000.