Wealthy Investors Are Warming To Robo-Advisors, Exclusive Research Shows

Josh O'Neill

6 December 2017

High net worth investors are “very open” towards robo-advisors and are willing to allocate a significant share of their assets to them, according to a new report shared exclusively with this publication.

Data presented in the report by , the Swiss research house, shows that nearly two thirds (63 per cent) of wealthy individuals would invest more than a quarter of their assets with a robo-advisor.

“The openness of the young and wealthy client segments towards robo-advisors is very promising for the long-term perspective of automated investment services,” Carmela Melone, senior analyst at MyPrivateBanking, said.

As part of the report, titled Investors’ attitudes towards robo-advisors 2017 – Evidence from five key wealth management markets, MyPrivateBanking surveyed 1,000 “mostly affluent and wealthy” respondents from the US, UK, France, Germany and Switzerland to gauge their feelings towards robo-advisors. Generally speaking, these are digital platforms that use complex algorithms and online questions to determine asset allocation and risk appetite.

In terms of age, the Millennial cohort (defined as age 18-34) is the leading segment, as 40 per cent are already managing their assets through a robo-advisor and 44 per cent have said they would consider doing so in future.

But investors still want a human touch when investing, the research shows, giving merit to arguments that face-to-face advisory is still a cornerstone of wealth management.

Some 91 per cent of respondents want to have the option to interact with a human advisor.

“They will not replace traditional wealth management services, but complement them by gaining access to the next generation of clients,” Melone said.

Mobile capabilities are a must, the research shows. Mobile applications and mobile-optimised websites are among the top three must-have technical features of robo-advice platforms, as cited by 54 per cent of respondents.

But Melone stressed that plush interfaces alone will not garner the interests of the uber-rich.

“Robo-advisors that want to win affluent and wealthy clients must carefully design the onboarding process, but to keep them they have to offer more than a fancy interface and software,” Melone said. “To succeed in this demanding client group, they need to enable clients to connect to a human advisor. The pure robo approach is not an option for the majority of affluent and high-net-worth investors.”

Attitudes towards robo-advisors vary “significantly” cross-jurisdictionally, the report says.

US investors, for example, appear particularly cautious and demanding of robo-advice, and they expect human advice to be an “integral” part of a digital platform.

Across the pond, UK investors have an above-average robo awareness, MyPrivateBanking points out.

Nearly two-thirds (64 per cent) of the cohort have “at least some knowledge” about robo-advisors, compared with 59 per cent of the global sample. In France, nearly half (45 per cent) of respondents use a robo-advisor, compared to 29 per cent of overall respondents.

Germany and Switzerland have the “highest potential” for pure robo-advisors, as 12 per cent of those surveyed in each nation expect no human interaction.