The trend toward online investing and advisory services, also known as robo-investing and robo-advice is gaining momentum, but industry participants are struggling to get a handle on how retail investors view and/or use robo-services to conduct their financial affairs.
Recent research conducted by major asset management firms has gleaned insight, yet often their findings turn up contradictory information. For instance, one study conducted by State Street Center for Applied Research found that 65% of retail investors believe that technology will do a better job at meeting their needs than human advisors.1 Other research conducted by Allianz Life®, which focused on generational approaches to investing and managing finances, revealed more complex attitudes.
Case in point: When baby boomers and Generation Xers were asked about using robo-advisors, a significant majority (69%) from both demographic groups said they “don’t really trust online advice.” Further, 76% opined that “there is so much selling online that it’s hard to trust the financial advice.”2
The same study revealed that while more than a third of respondents expressed some interest in working with a robo-advisor, just one in 10 would be comfortable having a relationship with an advisor that existed solely online.2
Yet as technology evolves and financial information proliferates online, investors are spending more time on financial websites, with 40% saying they visit such sites regularly, 13% go to financial sites daily, and 22% do some trading online. Among this group there appears to be a growing comfort level with the robo-experience, as 42% stated that “there’s nothing a financial advisor can tell me that I can’t find out online.”2
A Push-Pull Message
Indeed, study after study on the emerging impact of digital advice is finding widespread ambivalence on the part of investors. On one hand, they are increasingly comfortable with getting their financial information and conducting more business through digital channels, while on the other, they still gravitate toward human relationships when dealing with complex “big picture” planning issues such as meeting their income needs in retirement and setting and managing other long-term financial goals.
Still in its infancy, the world of Web-based financial services will no doubt evolve and present exciting new developments in the future.
This communication is not intended to be investment advice and should not be treated as such. Each individual’s situation is different. You should contact your financial professional to discuss your personal situation.
1financial-planning.com, “Can Advisors Rebuff Challenge of Automated Investing?” February 25, 2016.
2Allianz Life®, ‘ “Robo” Financial Advising on the Rise, But Gen Xers and Boomers Still Prefer the Human Touch,’ February 16, 2016.
This article was written for information purposes only and its content should not be construed by any consumer and/or prospective client as rebel Financial’s solicitation to affect, or attempt to affect transactions in securities, or the rendering of personalized investment advice for compensation. No client or prospective client should assume that any such discussion serves as the receipt of, or a substitute for, personalized advice from rebel Financial, or from any other investment professional. See our disclosures page for more information.
Phil Ratcliff, President of rebel Financial, is a senior financial advisor that holds an AIF®, CFP®, ChFC®, and CLU® certifications. He started his career at American Express Financial Advisors in 2003, then moved to AXA Advisors for 7 years before founding rebel Financial LLC in 2013.