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Half of ‘Financially Fluent’ Aren’t Aware of Robo Advisors

Though tech startups and traditional industry players are marketing automated digital advice to advisors and retail investors alike, new research shows that the concept may not be as popular as they let on.

According to the IMS Wealth Management Monitor, a new survey of 4,871 people (1,554 of whom are financial professionals) that Investing Media Solutions calls “financially fluent,” only half were even familiar with so-called “robo advisors.” Of that group, just 12 percent said they were considering adding a robo to their investing strategy in 2016.

Drilling down into that number, IMS found that most of the people considering a robo advisor aren’t confident in letting it control of more than a third of their assets.

Image Credit: Investing Media Solutions

While the companies market automated investing programs as tools to scale a business by efficiently taking on smaller accounts, IMS found this message isn’t necessarily resonating with consumers. Forty-two percent of investors with less than $250,000 in investable assets were aware of robo advisors, compared to 57 percent of those with more. For investors with more than $1 million to invest, that number jumps to 62 percent.

Advisors could be more aware of robos than retail investors. Research from Scottrade found that nine in 10 RIAs believe robos will become more prevalent in financial services over the next two years. Other research from ETRADE stated investors actually prefer the digital-hybrid approach taken by firms like Vanguard, which has reportedly attracted $31 billion in assets, to a more expensive, human-only approach.

If these are both true, and half of investors and advisors still aren’t aware that robo advice is even an option, it could mean a massive potential for growth in the digital advice marketplace.

TAGS: Technology
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