NEW YORK; Mar. 30, 2017 – Two-thirds (68 percent) of emerging wealthy and high-net-worth investors in North America prefer “hybrid” investment advice – a combination of traditional advisory services and low-cost digital tools – over either a dedicated human advisor or conventional robo-advisory services (computer-generated advice and services without human advisors) alone, according to research by Accenture (NYSE: ACN).
Based on a survey of more than 1,300 investors across income brackets and age groups in North America, the report, “The New Face of Wealth Management: In the Era of Hybrid Advice,” is part of a multi-year Accenture research initiative studying the needs of modern investors in the rapidly evolving landscape for financial advice.
“The ‘robo versus human advisor’ debate has lost relevance for investors and wealth and asset managers in North America,” said Kendra Thompson, managing director and head of Accenture’s global wealth management practice. “Our research clearly shows that investors want a combination of automated and human advisory services and that significant numbers of Millennials and Gen Xers have already turned to hybrid services.”
Overall, survey respondents were more likely to be satisfied with hybrid financial advisory services than with human-only or robo-only advisory services, in terms of ease of money management, digital tools, explanation of fees, customized services and low-cost products, according to the research. Digital technology – the web-based channels, tools and applications that enable a more-transparent and real-time understanding of a client’s investments – make hybrid models possible.
Investors using hybrid advice were nearly 50 percent more likely than those using only traditional or entirely automated advisory services to say they proactively seek and receive assistance on financial planning (64 percent versus 44 percent). Investors who use hybrid advisory services are also among the most likely to have discussed family needs with their advisors—including children’s financial needs (cited by 67 percent of respondents), parents’ long-term financial needs (58 percent) and estate & tax planning (42 percent).
Divided Feelings for Conventional Services
The survey found that investors don’t show a strong preference for either dedicated human advisory or conventional robo-advisory services. For instance:
- Thirty-eight percent of all investors said they would never take the advice of their financial advisor without first consulting another source. Nearly three-quarters (72 percent) of the wealthiest investors – those with a net worth of more than $10 million – and more than half (56 percent) of those with a net worth between $1.5 million and $10 million said they believe that human advisors don’t provide sufficient value.
- Roughly half (54 percent) of investors said they have received very good advice from their robo-advisor, and 51 percent said they trust their robo-advisor completely and would recommend it to family members or friends. However, approximately the same number (52 percent) said they would never take the advice of their robo-advisor without first consulting another source.
The research found that the needs of female investors differ from those of male investors and suggested that wealth management firms should adjust their service offerings accordingly. For instance, the female respondents were less likely than male respondents to have reported having a good understanding of their investments (61 percent vs. 75 percent) and talking to their advisors more than once per year (44 percent vs. 58 percent).
In addition, female investors were more likely than male investors – 62 percent vs. 54 percent – to say they prefer having the autonomy to pay based upon the service actually provided, even though dedicated financial advisors typically use fee structures based on a percentage of their assets under management. Female investors were also more likely than male investors to use dedicated-advisor services more than any other type of service (34 percent vs. 28 percent).
“Women present an extraordinary growth opportunity for wealth management firms, yet few firms have changed their advisory model to meet women’s needs,” Thompson said. “Many women prefer a different approach to wealth management than the one many firms have traditionally offered. Empowered women want advisors to understand their ‘life pictures’ and ‘financial journeys’ rather than just their investments.”
Some other key findings of the report include:
- Nearly seven out of 10 millennials (69 percent) are amenable to receiving investment advice from Google, Facebook, Amazon and other non-financial companies.
- Unlike baby boomers, millennials do not believe that traditional human advisory services provide any significant benefit over hybrid or conventional robo-advisory services, with nearly two-thirds (64 percent) of millennials saying they prefer hybrid advice, compared with only 28 percent of baby boomers.
- Millennials are far less trusting of human advisors than are baby boomers, being nearly three times as likely to say they would never take the advice of their advisor without consulting another source first (52 percent of millennials vs. 18 percent of baby boomers).
- A large number of investors are concerned about the cost of the advice they receive and are confused about fees: 42 percent said their advisory service is too expensive; 33 percent said they don’t know how much they pay for the advice; and 38 percent said they don’t understand how they are charged.
Accenture designed and commissioned an online survey of 1,354 active investors in the U.S. (1,082) and Canada (272), which was conducted in fall 2016. Respondents ranged in age from 21-70, across various levels of net worth, and included a near-even split by gender. The survey has an estimated margin of error of +/- 3 percent.
Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions – underpinned by the world’s largest delivery network – Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 401,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.
Sean K. Conway
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