Though the headlines are full of robo-advisor launches, acquisitions and forecasts, these automated advice services have not yet made it onto the radar screen of most U.S. investors, according to a recent survey.
In fact, fewer than half of investors (45%) with $10,000 or more in investments say they have heard about the emerging technology, and just 5% of investors report having already used a robo-advisor, according to findings drawn from the Wells Fargo/Gallup Investor and Retirement Optimism Index.
The survey’s authors say that one reason robo-advice has yet to catch on with more investors is likely revealed in the finding that fewer than half of investors say they go online to:
- 46% - make changes to their investments;
- 45% - rebalance their investments;
- 46% - calculate their retirement needs online; or
- 24% - get investment advice.
That said, the survey finds that most investors who have a personal financial advisor are open to that person using digital investing tools with their portfolio. Six in 10 investors would like their advisor to use the tool, with investors aged 18 to 49 more interested (68%) in having their advisor use the tool than those 50 or older (55%).
Tech-Savvy Advisors Preferred
Asked how they would feel about advice they might receive from a financial advisor who had a good website, apps and digital investing tools, the majority of investors (54%) say they would trust the advice a lot or a little more than advice from a less tech-savvy advisor. Only 15% would trust a technology-proficient advisor less, while 28% say they would trust that person about the same. This sentiment is particularly high among investors under 50, with 63% saying they are more likely to trust an advisor who offers them access to sophisticated digital tools, compared with 48% of investors 50 or older.
Human vs. Robo
Investors who know at least a little about robo-advisors largely believe the biggest advantages of human advisors are in helping people understand their investments (91% say this applies more to human advisors) and making people feel confident about their investments (90%). At least seven in 10 investors familiar with robo-advice also identify human advisors as better at advising clients on risk (83%) and taking each client’s entire financial picture into account (77%).
By contrast, robo-advisors earn their highest marks for simplifying the investing process and having the lowest fees. Investors also rank robo-advisors relatively well on matching investors’ investments to their risk tolerance and being reliable in turbulent markets.
While about 6 in 10 investors report doing basic financial tasks online – such as reviewing account fees and investment statements or transferring money between funds – half of investors say interacting with their primary financial services firm through a website or mobile app is most important to them, though this varies sharply by age.
Most investors under age 50 (69%) say they rely on the website or mobile apps to interact with their primary investment firm, while investors 50 and older mainly rely on the branch office or telephone (59%).
The findings are part of the Wells Fargo/Gallup Investor and Retirement Optimism Index, which was conducted May 13-22, 2016, by telephone. The Index includes 1,019 investors randomly selected from across the country with a margin of sampling error of +/- four percentage points, with total savings and investments of $10,000 or more. The sample size was comprised of 73% non-retirees and 27% retirees. The median age of non-retired investors was 47; for retirees it was 69.
