Are robo-advisers having a credibility crisis?
A new report has revealed that investors have retreated from e-investment platforms in favour of human advisers.
What’s more that robo-advisers are suffering a lack of trust when compared to their human counterparts, as 90% of the UK’s 30 million investors say they would not use them
- 11.9m (38%) investors say they do not/would not trust an automated investment programme to manage a proportion or all of their investable assets
- 72% of millennial investors need human interaction to feel safe about an investment of any sort
- 46% of investors say that following fluctuating economic events such as Brexit, they would now choose a human adviser, over an online platform, with regards to their investment decisions
The findings are part of a report entitled Investments in 2018: The Human Factor from IW Capital, the debt and equity investment specialist. The new nationally representative report reveals the sentiments of a population of 2004 high net-worth and retail investors, in addition to money minded consumers.
It unveils insights from a body of data representing 30.6m investors nationwide, a vast majority of which (89%, or 27m) elect to not use the technology. Over half of the sample (56 %, equating to 17.4m people UK-wide) state this is because they need human interaction to feel safe about an investment of any sort.
- only 11% of investors would use robo-advisors in the future;
- 11.9m (38%) investors say they do not/would not trust an online wealth manager to manage a proportion or all of their investable assets;
- almost a quarter of those surveyed have investable assets, but are holding-out/seeking financial advice from a person as opposed to an online wealth management platform as they do not feel confident in the latter with their money ;
- 5m investors (17%) say their risk appetite has increased in the last decade and do not feel online wealth managers will fulfil anticipated returns as they deem them to be low-risk;
- 14.2m investors – almost half the investor population – say, given the fluctuating economic and political events such as Brexit, they now would want to speak to a human advisor with regard to their investment decisions;
- 56% of investors need human interaction to feel safe about an investment of any sort;
- 14.7m people distrust robo-advisors with their investable assets as no human interaction is required when using an online service;
- 53% of respondents think financial advice from a human is invaluable, as confidence in financial decisions are relationship based just as much as they are figures backed;
- only 9% of respondents intend to use robo-advisors over the next five year.
With Brexit underpinning political uncertainty and contributing to a fluctuating economy, increasingly responsive asset management is required said IW Capital. Almost half of investors (14.2m people) say that the Brexit-induced economic unpredictability means they now want to speak to a human advisor about their wealth management decisions. Having this personal relationship enables investors to discuss their portfolio, revise their investment strategy and assess their risk appetite as the markets react to Britain’s unfolding Brexit agenda.
Percentage of those who feel the fluctuating economic and political events such as Brexit influence them to speak to a human advisor with regard to their investment decision:
|Agree||46 %||57 %||43 %||46 %|
|Disagree||16 %||4 %||16 %||16 %|
IW Capital commissioned the ‘Why Humans Matter’ report to uncover the willingness of investors to move from human financial advisors to robo-investors. The research has been compiled across a nationally representative survey of 2004 respondents, and cross-referenced across investable asset size, gender, age and location.