Despite much of the hype about robo-advisors, it appears most individuals are not ready to take advice from them, a survey shows.

The notion that robo-advisors are poised to throw humans out of work is premature and savers are as keen as ever to explore financial affairs the old fashioned way, according to a survey in the UK.

Research carried out by True Potential, an investment platform, shows that the “vast majority” of consumers are not confident enough to invest without communicating with an advisor.

The findings are part of True Potential’s four-year Savings Gap campaign that has polled over 26,000 people to date. For the latest survey, the firm polled 2,000 members of the public and asked how confident they would be using only automated solutions to invest. Some 71 per cent of people said they would not be confident. Only 9 per cent said they would confident using automated advice with no help from a financial advisor.

The findings mirror those from a similar study by True Potential last year in which 65 per cent of consumers said they would limit investments made via robo-advice to £1,000.

“Automated advice technology is years away from being truly intuitive and sophisticated enough to adequately support consumers. For small investments, technology has its place, and is enabling financial services to become more accessible,” said David Harrison, managing partner at True Potential. 

Amid concerns about the so-called “advice gap” and fears that citizens lack access to face-to-face advice because of rising regulatory and compliance costs, new more automated business models, using algorithms to drive asset allocation, have taken root. These “robo-advisor” business models, such as Nutmeg in the UK, or Wealthfront in the US, are seen as potential threats to existing, traditional wealth management models. UBS has launched its SmartWealth digital wealth manager in the UK to keep ahead of this trend, for example, although that offering does not carry a "robo" tag.

However, the True Potential findings suggest that while much of the buzz around robo-advisors and digital technology is genuine, there remains significant reluctance by the public to put full faith in digital options.
 
When trouble hits
Respondents were asked what they would do in terms of investment if stock markets dropped this year. Only 9 per cent of those questioned would make the financially rational decision to invest more as share prices fall. A third of consumers, meanwhile, would take the inadvisable approach of ceasing or cutting down their investments until markets recovered.

The majority (60 per cent) of respondents said they would take no action, therefore missing out on the opportunity to take advantage of rock bottom share prices.