As the world gets increasingly more tech-savvy, it seems likely that more investors will turn to robo-advisors. We’re not there yet though, as a recent survey indicates that investors still have yet to trust their money to a robot. It seems as if people still want a human’s touch when it comes to their finances.
Robo-advisors haven’t yet converted consumers
We’re already starting to see robo-advisors take over some functions previously performed by humans at some financial firms, but consumers aren’t yet at a point where they’re comfortable with them. Market research firm GfK conducted a survey on robo-advisors and digital trends in investing recently and found that just 9% of consumers said they would be likely to use an investment advisory firm that only offered digital interactions (in other words, text or online chat) between them and humans.
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Unsurprisingly, younger consumers were more open to the idea of only interacting with people at investment advisory firms through digital means. According to GfK’s survey, 15% of consumers between the ages of 25 and 34, who are one part of the Millennial generation, were open to digital-only customer service. However, less than 5% of those age 50 or older would be interested in investment firms that only offered digital interactions.
In terms of financial products, GfK said consumers were least open to digital-only interactions for investments and mortgages but slightly more open to all-digital service for checking and savings accounts.
Robo-advisors not yet trusted
The firm found that only 10% of consumers would trust financial advice from a robo-advisor more than a human. Additionally, half of those surveyed disagreed with the statement that they would trust a robo-advisor more. Again unsurprisingly, the level of trust for robo-advisors increases with the age of the consumer. GfK said 17% of the group ages 25 to 34 was likely to trust robo-advisors more than a human, while only 6% of those age 65 and older would trust a robo-advisor more than a person.
The firm also reports that consumers are willing to pay more for interactions with people, as 38% of those who participated in the survey said they would pay more to be able to reach a person for help with their financial services. Additionally, 45% of those surveyed said they wouldn’t sacrifice live customer service to save money.
Based on the results of the survey, GfK researchers say it’s too early for financial firms to bank on robo-advisors as the future of their industry.
“Financial firms are betting on an increasingly automated customer service approach to help them stay lean in an unforgiving consumer marketplace,” explains Tom Neri, Managing Director of GfK’s North American Financial Services team. “But even digitally native Millennials are only lukewarm to this vision when it comes to the difficult area of investments. FS companies need to be cautious in deploying robo-advisor technology, making sure to provide their high-value customers with the service they need; a one-size-fits-all seems certain to alienate even young investors.”
GfK suggests that investors may not trust robo-advisors yet because of recent disappointments with the digital properties of their current financial firms. The survey indicated that just 27% of consumers agree that it’s easy to access the information they’re looking for via their financial services firms’ websites. However, 26% disagree with the statement.