Public still prefers human touch to robo-advisor
Written by Peter Walker
The majority of Americans (88 per cent) want technology to complement, not replace, the assistance of a human financial advisor.
This is according to a survey of 2,000 US adults commissioned by MDRT and conducted online by The Harris Poll. It also found that only five per cent think financial planning should be managed entirely by technology-based tools.
“Due to their experienced insight, expertise and personal touch, human financial advisors are still in high demand amidst the growth of robo technologies,” said Ross Vanderwolf, MDRT president.
While 83 per cent of Americans would trust a human financial advisor to effectively manage their financial plans, only 36 per cent would trust the job to a robo-advisor. Moreover, 85 per cent said they prefer working with a human financial advisor rather than a robo advisor. In addition, 36 per cent strongly disagreed that robo-advisors could completely replace the role of human financial advisors in financial planning.
The top benefit Americans cite for working with a human financial advisor was the opportunity to build a trusting relationship (65 per cent), followed closely by the high level of human interaction (58 per cent) and ease of communication (52 per cent). The main concerns of working with a human financial advisor are cost (47 per cent), response time (32 per cent) and accuracy of assessments (31 per cent).
The top benefit of working with a robo-advisor over a human advisor, according to Americans, is minimised risk of human error (49 per cent). The main concerns are lack of two-way conversational communication (58 per cent) and breach of data, including personal (46 per cent) and financial (44 per cent).
When it comes to hiring a financial professional or using technology, Millennials (ages 18-34) are split. About half (52 per cent) would trust a robo-advisor to effectively manage their financial plans, while the remaining 48 per cent would not. Millennials were also twice as likely as some of their older counterparts (ages 45+) to agree that robo-advisors could completely replace the role of human advisors in financial planning (38 per cent vs. 17 per cent).
An internet platform for scheduling appointments is important to 84 per cent of Millennials with an advisor and 78 per cent stated a platform to host virtual meetings is a priority.
Only 17 per cent of Americans aged over 45 agreed that robo-advisors could completely replace the role of human advisors, and 44 per cent of those aged over 65 said there is no benefit of working with a robo-advisor over a human advisor.
Older Americans (age 55-64) who work with a human advisor also value their advisor using various updated technology-based tools to manage their finances. More than three out of four consider cloud technology for storing/accessing client plans (80 per cent) and an internet platform for scheduling appointments (77 per cent) valuable tools for their advisors to incorporate.
“This study suggests Americans have not outgrown human advisors; instead their preference lies in combining the personal and trustworthy touch of an advisor alongside cutting-edge technology,” said Regina Bedoya, MDRT vice president.