July 30, 2015 Fact of the Day: How much should a virtual advisor cost?
The majority opinion is that working without the services of a human advisor should cost significantly less than what an investor would pay to have a human-to-human advisor service. Fifty-one percent of all investors believe a virtual advisor service should cost between 60 and 90 percent less than a traditional financial advisor.
Thirty percent of investors believe the cost savings should range between 30 percent and 59 percent, while 19 percent of investors think a robo-advisor should save the investor between 5 and 29 percent over what a traditional advisor would cost.
However, younger investors are more relaxed about the topic. Among investors under the age of 35, 62 percent believe the cost savings should range between 5 and 59 percent, while only 39 percent are looking for a 60-90 percent savings.
On the other end of the spectrum, the wealthiest investors believe a virtual advisor should save them significant dollars. Almost 60 percent of investors with a net worth between $5 million and $25 million believe a virtual advisor should be 60 to 90 percent less expensive than a human advisor.
Investors seem to have a fair understanding that you get what you pay for. Among the 6 percent of investors who use robo-advisors, only 47 percent say they are satisfied overall with their virtual advisor. On the other hand, the 90 percent of investors who use a human advisor report an 85 percent satisfaction rate.
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