SOURCE: Spectrem Group

Spectrem Group

January 12, 2017 08:00 ET

New Spectrem Report Indicates Many Investors Find Robo-Advisors to Be Equal to or Superior to Human Advisors as Technology-Based Financial Advisory Services Grow

CHICAGO, IL--(Marketwired - January 12, 2017) - A new Spectrem Group study reveals that less than a decade after the first introduction of robo-advisors, certain investors now believe these technology-based advisory solutions may actually be better than human advisors at certain tasks.

The new report, Wealthy Investors and Their Perceptions of Robo-Advisors, reveals that nearly a third of investors believe robo-advisors do a better job than human advisors when picking stocks to meet risk tolerance (30 percent) and selecting investments for retirement plans (28 percent).

Financial providers and advisors should take note that first-time investors are more frequently employing robo-advisors rather than human advisors. At the same time, many advisors who work for firms with their own robo-services available are now suggesting that their clients consider moving some assets into automated programs to lower fees and ease the investment process.

Although younger investors are the group most likely to embrace the use of robo-advisors, the report reveals the average wealthy investor using robo-advisors is 48 years old, signaling that investors of all ages may be willing to utilize them if it meets their financial needs.

The report, which surveyed investors with a net worth greater than $100,000, compares investors who use robo-advisors with investors who do not use them, and paints a detailed picture of how both segments of investors perceive robo-advisors. Even among some non-users, robo-advisors are considered equal to humans in the performance of both basic and complex functions.

Key findings include:

  • More than half (56 percent) of investors who utilize a robo-advisor did not have an advisor prior to using the automated service. This includes 64 percent of those robo-users over the age of 61, signaling that older first-time advice seekers are turning to robo-advisors.
  • Almost half (46 percent) of wealthy investors who use robo-advisors indicated that their traditional advisors had suggested the use of robo-advisors offered by their firm for a portion of their assets. This indicates that financial providers are accepting the appeal of robo-advisors to certain investors.
  • Younger investors are not the only group of clients utilizing robo-advisors. Among those who use these services, 20 percent are over the age of 61, and for 16 percent of those older investors, their robo-advisor is their primary advisor.
  • Among non-robo-users, 49 percent do not use a robo-advisor because they prefer the personal attention they feel they get from a human advisor.

"Our research consistently shows that robo-advisors are becoming increasingly accepted by wealthy investors," said Spectrem President George H. Walper, Jr. "To remain competitive, traditional advisors should lead with their unique expertise in establishing a financial plan and emphasize their ability to evaluate and react to world events. By staying in close touch with the evolving needs of their clientele and adjusting investment strategies accordingly, advisors can play to their strengths, while also recommending technology-based platforms for certain tasks."

Additional information on Wealthy Investors and Their Perception of Robo-Advisors and other Spectrem studies can be found at Spectrem.com. Spectrem will also conduct a free webinar on the use and perception of robo-advisors among wealthy investors on Wednesday, February 1.

About Spectrem Group: Spectrem Group (www.spectrem.com) strategically analyzes its ongoing primary research with investors to assist financial providers and advisors in understanding the Voice of the Investor.

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