The “virtual advisor” and “robo-advisor” are concepts still new for most investors, according to Spectrem Group’s report, “Wealthy Investors and their Perceptions of Virtual Advisors.” Respondents indicated they are not nearly as familiar with the terms as they are with terms connoting human advisors, such as Registered Investment Advisor and Independent Financial Planner.
Not surprisingly, Millennial investors ages 35 and under, are most likely to indicate familiarity with the terms “robo-advisor” and “virtual advisor.” In contrast, familiarity with the designations Independent Financial Planner and Registered Investment Advisor increase with age.
A significant majority of Affluent investors report they do not as yet use robo-advisor or virtual advisor services. Conventional wisdom dictates that younger investors would be the earliest adaptors and most pervasive users of 21st-century technology in their financial affairs. Robo-advisor or virtual advisor usage is no exception, “Wealthy Investors and their Perceptions of Virtual Advisors” finds.
The highest percentage of surveyed investors who use a service that is 100 percent technology- based and which recommends a portfolio for them to invest in based on provided personal information are Millennials ages 35 and under (17 percent), followed by Gen Xers (11 percent). That is nearly four times as much as Baby Boomers and seniors ages 65 and up (4 percent each).
Similarly, Millennials are twice as likely as Baby Boomers (7 percent vs. 3 percent) to use a service which offers communication with a virtual advisor through Skype/Face Time video or on-line chat communication.
Gender is not a significant factor on robo-advisor or virtual advisor usage. Six percent of women said they use a 100 percent technology based advisor service vs. 5 percent of men. They are evenly split (3 percent vs. 3 percent) on usage of a Skype/FaceTime advisor communication service.
Robo-advisor or virtual advisor usage provides a client relationship-building opportunity for financial advisors. Wealthy investors using technology-based advisor services are placing their assets primarily in their advisors’ care more than those who do not use these services, an indication they are not opposed to utilizing an advisor’s assistance.
Further, the balances of investors who use robo-advisors tend to be lower than those who do not. This is an opening for an advisor to show his or her value in helping the investor to manage their accounts and grow their balance.