Robo-Advice Popular Amongst Millenials, Human Support Essential for Adoption

A new study by Australian research firm Investment Trends across Australia, the USA, the UK, Spain, Germany, France, Singapore, and Hong Kong is exploring the attitudes of different investors towards robo-advisors.

The data has been collected between February and December 2017 via a large-scale survey of over 10,000 online investors.

According to Investment Trends, while the concept doesn’t sound foreign to investors any longer, the key to attracting investors to robo-advisors is the right staff. Currently, the generation which is most interested in the product is millennials, however, the lack of savings for this part of the population could be a problem. According to a Bank of America study, 46 percent of millennials don’t have any savings, with another 21 percent storing less than $1,000.

Despite the focus from the younger generation, robo-advisers have the potential to increase interest from wealthier groups of the generational pyramid.

Recognition in the US on the Rise

Robo-advice is most recognizable in the United States where 39 percent of investors that have been surveyed are familiar with the product. Residents of the UK are next in line with 23 percent, followed by Australia where 22 percent of the respondents to the questionnaire from Investment Trends are well aware of robo-advisors.

Commenting on the sentiment in Australia, the home country of Investment Trends, the company’s Research Director, Recep Peker, said: “Many Australian online investors tend to see themselves as early adopters of innovative solutions, so there is little surprise to see rising awareness and adoption of providers such as Acorns and Stockspot.”

“Our research shows widespread adoption of robo-advice in the United States, with 1.6 million American online share investors now using these solutions, up almost two-fold in 2017 alone,” said Peker.

Adoption Dominated by Millenials

At present, the main age group which is actively using robo-advisors are millennials. Interest from groups which are wealthier is present, providing an opportunity for providers of the product. A total of 36 percent of online share investors aged 65 and above are keen to consider using robo advice, with the percentage rising above 40 percent for those in the 55 to 64 age group.

“While current robo-advice users tend to be younger and less wealthy, the demographic profile of those interested in using robo-advice closely matches the broader investor population, highlighting a key opportunity for robo-advice providers,” said Peker.

“The significant interest in robo-advice reflects a growing population of Australians with unmet financial advice needs. Many Australians, young and old, want professional help to achieve their lifestyle goals and improve their financial situation, and many believe that robo-advice solutions can help them along this journey,” added the Research Director of Investment Trends.

Building Trust is Key

The digitalization of society has its positive side, but building trust in the ability of machines is something that requires human support and guidance. Amongst users in Australia for example, the surveyed part of investors is not entirely comfortable with a digital-only proposition.

Over two-thirds of prospective robo-advice users, share that they would follow the recommendations only if follow-up customer service was available. The form of this assistance can be either a live chat service, a phone conversation, or face-to-face.

“Building trust is vital to the success of robo-advice providers, and good customer service is the first step towards fostering trust. While younger potential users are more likely to trust and implement a recommendation without the need for human involvement, a multi-channel customer support is vital to get older investors over the line,” concluded Peker.