Robo-advice survey: the results

18 Jul 2016

We recently undertook a worldwide customer survey to understand what the perceived implications of robo-advice will be on the Australian mutual funds market.

Robo advice is only for serving the mass affluent sector

Respondents overwhelmingly disagreed that robo-advice is only serving the mass affluent sector. Robo-advice is clearly becoming a much more established form of investing amongst mass affluent and high net worth individuals – this may be due to its higher levels of efficiency and overall lower cost. At present the average assets under management per client is significantly lower for robo-advisers than for traditional advisers, but this is changing.

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I would personally be confident to use a robo-adviser

Faith in robo-advice is on the up. A significant majority of respondents agreed that they would personally be confident to use one. The results do show, however, that there is still some anxiety in the marketplace. Robo-advisers do not necessarily, for example, provide advice that fits the client’s particular goals, objectives or life circumstance. They fit the client into a predetermined set of categories. This may lead to potential misspelling claims in the future.  

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Robo advice will eventually become the standard way of providing advice

Responses were mixed when asked whether or not robo-advice will eventually become the standard way of providing advice. It does face a few hurdles on its journey to become the main way of providing advice – a prolonged period of poor returns due to weak financial markets could, for example, turn away investors. Many clients feel that they can never replace the ‘human touch’ – financial advisers will need to start to differentiate themselves around customer experience if they are to maintain competitive advantage.

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Despite this, the market is growing quickly and a number of large international asset managers are already buying their own robo-advice platforms. In June, the UK’s Financial Conduct Authority launched its own robo-advice unit. It is not necessarily, however, the threat that many advisers believe it to be – if access to cheap and easy advice encourages savings at a lower level, which in turn then moves to traditional advice as portfolios grow in value.  



Jon Willis

Posted by Jon Willis, Chief Commercial Officer.