Robo-advice is no longer a foreign concept in Australia: Investment Trends Report

From

Peker Recep

Robo-advice (or automated investing) is gaining traction in Australia and across the globe. The latest Investment Trends Robo-advice Report is based on a large-scale survey of over 10,000 online investors and 1,425 financial advisers conducted between February and December 2017 across Australia, the USA, the UK, Spain, Germany, France, Singapore and Hong Kong.

This year’s study highlights a number of important trends:

  • Robo-advice is no longer a foreign concept in Australia
  • Current robo-advice users are predominantly millennials, but there is healthy appetite across all age segments
  • Human support and guidance is key to further adoption

Robo-advice is no longer a foreign concept in Australia

Robo-advice has gained significant recognition among the Australian online share investor population, with 22% saying they are familiar with these services, a level that is on par with the UK (23%). Only in the United States – where the bulk of innovation in robo-advice is taking place – is familiarity with robo-advice significantly higher (39%).

“The Australian financial services industry is ripe for disruption, as more and more investors take notice of digital advice solutions as an alternative to traditional advice models,” said Recep Peker, Research Director at Investment Trends.

“Many Australian online investors tend to see themselves as early adopters of innovative solutions, so there is little surprise to see rising awareness and adoption of providers such as Acorns and Stockspot,” added Peker.

“Our research shows widespread adoption of robo-advice in the United States, with 1.6 million American online share investors now using these solutions, up almost two-fold in 2017 alone,” said Peker. “This paints an optimistic picture of the potential for mainstream adoption of robo-advice here in Australia.”

Current robo-advice users are predominantly millennials, but there is healthy appetite across all age segments

In Australia, current adoption of robo-advice is dominated by millennials, but there is healthy appetite to use these solutions across all age groups. For instance, 36% of online share investors aged 65 and above say they would consider using robo-advice, while 40% of those in the 55 to 64 age group are keen to do so.

“While current robo-advice users tend to be younger and less wealthy, the demographic profile of those interested in using robo-advice closely matches the broader investor population, highlighting a key opportunity for robo-advice providers,” said Peker.

“The significant interest in robo-advice reflects a growing population of Australians with unmet financial advice needs,” explained Peker. “Many Australians, young and old, want professional help to achieve their lifestyle goals and improve their financial situation, and many believe that robo-advice solutions can help them along this journey,” added Peker.

Human support and guidance is key to further adoption

Australians are not entirely comfortable with a digital-only proposition. Among potential robo-advice users, the vast majority (68%) say they would trust the recommendations of a robo-advice service only if follow-up customer service was available, such as assistance through a livechat service, phone or face-to-face.

“Building trust is vital to the success of robo-advice providers, and good customer service is the first step towards fostering trust,” said Peker.

“While younger potential users are more likely to trust and implement a recommendation without the need for human involvement, a multi-channel customer support is vital to get older investors over the line,” added Peker.

About the report

The Investment Trends Robo-advice Report uncovers the adoption of robo-advice services among current online investors across the globe. The Report is based on detailed online surveys completed by over then thousand investors across 8 key countries between February and December 2017

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