Think people who use robo-advisers don’t want to talk to you? Think again

Pop art illustration of a smartly dressed bearded man butting heads with a robot.

By AdviceBridge

Research carried out by Vanguard Group, which manages $8.1 trillion in assets, revealed that despite the popularity of robo-advisers, 9 in 10 robo-advised clients are considering switching to a human adviser in the future.

Of 1,500 people surveyed, many also believed that there’s room for automation of services within financial advice firms.

With this in mind, the question is: how do you effectively incorporate both models into your business and service delivery?

Robot vs. human advisers, what do investors really think?

Having surveyed 1,500 advised clients about loyalty and perceptions regarding both robot and human financial advice, the US research revealed that:

Advice adds value across the board

Investors believe advice provides improved portfolio value versus “going it alone.” Specifically, human advice came out ahead with 5% being the perceived value-add to annual performance while digital-only advice fared marginally less well with 3% perceived value-add.

Preference for financial advisers is enduring

Although more than 90% of human-advised clients said they wouldn’t consider switching to a digital service, 88% of robo-advised clients would consider switching to a human advisor in the future.

Boring Money’s 2022 Advice Report agrees with this statistic. However, they have also shown that once the client is “educated” about what options are available, this drops to 60%.

It’s useful to note that time, willingness, and ability to manage investments play a key role in determining client preference – a point we’ll return to shortly.

Clients prefer emotional support from human advisors

Investors with human advisers estimate that they are $160,000 closer to achieving their financial goals and three times as many report that having a financial adviser gives them strong peace of mind.

Digital also serves a role for clients

Areas where investors specifically prefer a digital service approach include areas of portfolio management, such as diversification and tax optimisation.

Preference for advice service delivery is not dictated by client age or wealth

Regardless of age or level of wealth, most clients would like to see a degree of automation for some portfolio management services.

Read more: The figures don’t lie: Why advice firms must provide all three engagement channels (adviser, digital, and hybrid) for all client types

Human advisers retain the advantage

Despite the rapidly changing advice landscape, and the acceleration towards digital, most investors maintain significant loyalty to their human advisers.

When asked, “If you had to leave your current [human] advisor today, what type of advising relationship would you search for in the future?”, 93% of those people already using a human adviser said they would seek another advice service that included a human adviser in the future.

So, while headlines may shout about the demise of human advice in the face of technology, the data suggests that, in fact, investors have strong loyalty to keeping a human financial adviser.

Note: The sample in this illustration includes all responding investors who only have human advisors (1,175 in total).

Source: Vanguard and Escalent

Robo-advised clients demonstrate significantly less loyalty

On the flip side, the same loyalty was not shown when digital-advised investors were presented with the opportunity of hiring a human replacement.

88% of robo-advised clients said they were willing or extremely willing to work with a human adviser at some point in the future.

Note: The sample in this figure includes all responding investors who only have digital advisors (135 in total).

Source: Vanguard and Escalent

As Paulo Costa, behavioural economist with Vanguard, says, “Robo-advised clients could represent an untapped and under-targeted market to convert for human advisers, especially as those investors’ needs become more complex.”

Understand how the value you provide taps into robo-advice clients’ desires

According to the findings, investors favour human advice for all the things that every good financial adviser or planner should do naturally.

Investors want to feel that their adviser knows them and understands their long-term retirement goals. And, like you, they also value the long-standing nature of the investor/adviser relationship.

By working in your clients’ best interests, you will help them feel that they are in safe hands and that their needs are being taken good care of. This comes with listening to client stories, and being unafraid to ask difficult questions about their goals and aspirations.

Ultimately, the value of a human financial adviser is the humanity that is indelibly tied to your role as trusted adviser and the way you can demonstrate empathy for every clients’ unique personal circumstances and needs.

Humanity will forever be of value and something that robo-advisers could never deliver.

Pinpointing the value in digital automation

This desire for the human-side of advice is countered with a strong belief that for the more functional tasks, such as portfolio construction, investors prefer the service delivery to be digital and automated.

The tasks that investors prefer to see digitised are:

  • Managing taxes and capital gains efficiently
  • Gathering accurate inputs for clients by helping them understand how to answer queries
  • Accounting for scenarios of different market conditions or life events – the “what-ifs”
  • Preventing details, or entire accounts, from being overlooked
  • Diversifying investments
  • Simplifying for organised, cohesive management.

All of which are areas that the AdviceBridge platform can help you navigate.

Get in touch

The AdviceBridge platform is easy to implement and integrates seamlessly with existing software, significantly improving your business processes.

Whether you want to spend valuable time with your clients, make your business more cost-efficient, or automate your advice journey, the AdviceBridge platform is great for maximising profits.

To find out more about how AdviceBridge can help you digitise your business processes and benefit you, your team, and your clients, get in touch. Email or call us on 020 3925 3850.