Peker Recep
One of the hottest topics in the industry is the proliferation of automated investment services, or so called robo-advice tools.
Leading research firm Investment Trends yesterday publicly released its inaugural Robo-advice Report, an in-depth study assessing the adoption and impact of automated investment services. The study is based on a large-scale survey of nearly 9,000 online share investors and 1,450 financial advisers across 5 key countries between April and July 2016.
Key highlights from the 2016 Investment Trends Robo Report :
- Awareness of robo-advice in Australia is accelerating
- Robo-advice can be a game changer for many Australians
- Financial planners are embracing what robo-advice can offer
Awareness of robo-advice in Australia is accelerating
In Australia, the use of automated investment services or robo-advice is still nascent but may soon change with growing awareness of these solutions. The latest Investment Trends research reveals 27% of the Australian online investor population have already heard of robo-advice, up from 19% just 6 months ago.
“Many investors are taking notice of robo-advice, and have an interest in learning more about this potential digital disruptor in the financial services industry,” said Investment Trends Research Director Recep Peker. “Robo-advice will take centre stage as more solutions become available, and as investors themselves begin to engage with these non-traditional advice models.”
Encouragingly, Australian online investors typically see themselves as early adopters, with 56% saying they are among the first to try products and services new to market. “Australians’ openness to new solutions is an encouraging sign for providers who are considering the robo space,” said Peker.
Robo-advice can be a game changer for many Australians
Investment Trends research shows half the Australian adult population (48%) have unmet advice needs, most often relating to investing, tax-related areas and retirement planning.
“The number of Australians receiving advice from financial planners has decreased substantially since the GFC, while the wealth of those receiving advice has risen in excess of 50%,” said Peker. “This has created a substantial advice gap, with many individuals underserviced.”
“The rise of robo-advice comes at a time when the desire for advice is high, and it can make a difference to people who may not necessarily be able to afford advice,” said Peker. In the United States, robo-advice usage is not isolated to younger, wealthier tech savvy investors. Adoption is also high among lower balance pre-retirees. “Robo-advice should not be viewed as a Gen-Y exclusive proposition,” said Peker. “The advice gap spans the population regardless of age and wealth, and if robo-advice services can use technology to deliver tangible outcomes, it will ultimately benefit all investors.”
Financial planners are embracing what robo-advice can offer
As a whole, more financial planners are optimistic about robo-advice compared to those who are worried about its impact on their business. The vast majority (83%) believe robo-advice is not a threat to the financial planning industry and/or has a place in the planning practice.
“In the financial planning world, robo-advice is much more than just automated portfolio recommendation and rebalancing tools,” said Peker. “Planners see robo-advice assisting across the entire advice delivery spectrum, from the front to the back office.”
When asked how automated advice tools can benefit their business, financial planners most commonly perceive automation as an enabler to help them to focus on providing strategic advice (53% cite this), service more clients (43%) and lower the cost of advice (41%).