What Do The Public Think Of Robo Advisors and How Are Firms Reacting?

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What The Public Think Of Robo Advisors & How Firms Are Reacting To It

The number of robo advisors in the investment industry continues to grow, along with the number of users. By 2020, 58 percent of Americans say they expect to use robo advisors and users believe that they’ll be twice as likely to prefer this method of financial management, according to results from a report released by Charles Schwab last year. Planning for the future has been a well-known tip for financial success in the long run and for many, investing is a go-to method. As the innovation continues to cement its place in the investment industry, take a look at how well they have got on with the consumers, and recent developments in response to the opinions.

Robo Advisors Are Finding Their Niche

By 2020, it is estimated that over $1 trillion dollars in assets will be managed with the use of automated investment services. While a significant amount of past investments has been the conventional stock and bonds variety, 2019 will open up new avenues for robo advisors including Islamic finance. This has been in direct response to the call for more accessible and targeted services for people of all walks.

In 2018, US-based investment firm Wahed Invest launched their robo advisory services in the United Kingdom. Aimed at the Muslim population, the launch has meant that they can plan their financial futures according to the recommendations of halal financing such as avoiding companies with high ratios of debt or companies selling tobacco or alcohol. Next on the agenda for the company is an expansion into the Southeast Asian region sometime this year.

Consumers can also expect to see more gender-specific and limited options advisors. In Singapore, Marvelstone Capital launched Miss Kaya, a female only robo advisor in response to reports that most women tend to avoid managing their finances themselves. While gender-specific robo advisors are not new to the market, there will be a rapid increase in their presence.

Human Contact Remain Paramount

Consumers still prefer a human touch. Even within the millennial population that is often termed more technology savvy, 80 percent of them seek an advisor that connects to a person. While the benefits of automating your investments are quickly becoming more known, one thing still stands out: investors seek the human touch, and firms are acknowledging this. More companies will introduce over the phone and face to face remote advisory services as an alternative option for filling out a standard questionnaire online. In late 2018, The Financial Times announced that UK based Nutmeg was adding a phone-based service to its offerings.

Finding Favor With The Older Population

The success amongst millennials was somewhat expected. As the younger population actively embraces (and even seeks) technological changes, the support for robo advisors from this age group is not a surprise. However, recent reports have shown a shift in preference when it comes to seniors and automating their retirement finances. The average age of those using the technology now hovers at 48 years old and 20 percent of them are over 62 years old. Interestingly, the older population are also relying more on robo advisory services. Over 16 percent of investors aged 62 and older use it as their primary investment tool. While not as many as younger users, the older population is certainly catching up.