Robo advisors have grabbed headlines in recent years with stories about how they represent the next wave of financial advice. Just two weeks ago, for instance, the San Francisco 49ers announced a partnership with the robo advisor firm Wealthfront. But the “rise of the machines” has so far failed to translate to a sea change in consumer preferences.
According to a recent Wells Fargo/Gallup Investor and Retirement Optimism Index survey of a nationally representative sample of investors with $10,000 or more in invested assets, consumers are more than twice as likely to use a dedicated financial advisor than an online financial planning website. One in five respondents said they use an online financial planning website, compared to 44% who work with an advisor. Consumers are also more likely to seek financial advice through a call center (35%) or a friend or family member (29%). Overall, 80% of respondents used one or more of the four channels covered by the Wells Fargo/Gallup poll, underscoring a strong preference for expert advice in investing and financial planning.
However, when it comes to robo advice, the survey noted a “strong generational skew” in the results. Two-thirds of pre-retirement investors indicated “some level of comfort” with online financial advice, compared to just 35% of retirees.
As retirees continue to age and the proportion of investors who have grown up with the internet increases, it’s likely that more investors will be comfortable with robo advice. RIA firms that effectively utilize technology, but without completely removing the human element of financial advice, could capitalize on this trend.