So you are going to work with a robo-advisor, an online service that uses your inputs to determine investment strategies without the services of a human financial advisor.

What do you think you should pay for such a technology-based service?

That is a question asked in Spectrem’s new study on virtual advisors – Wealthy Investors and their Perceptions of Virtual Advisors. In the report, investors who use robo-advisors were compared to those that do not, as well as to investors who use a human advisor through video-chat capabilities only.

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.

 

To learn more about Robo-Advisors, click here