Wealthy investors choose traditional advisers over robo-advisers

Study finds affluent prefer face-to-face meetings, don't trust online advice platforms

Feb 19, 2015 @ 12:59 pm

By Alessandra Malito

Robo-advisers may be all the rage, but wealthy investors aren't buying into the trend.

On a scale of 1 to 100 (1 being low and 100 being high), wealthy investors rated their knowledge of robo-advisers at 15.47, according to a new Spectrem study. Meanwhile, only 6% said they have ever used a robo-adviser.

Of those, only 47% of respondents characterized themselves as being satisfied with their robo-adviser, compared with 85% of those who said they were satisfied with their traditional adviser, according to the survey.

The survey found that wealthy investors are more likely to use robo-advisers if they already have a traditional adviser with whom they can talk face-to-face about their finances.

“They're hesitant about the concept of sitting down, putting their information in and getting an answer,” Spectrem chief executive George H. Walper, Jr. said. “They would like a relationship with an adviser and then to utilize the technology in conjunction with that.”

In fact, robo-advisers may be an adviser's chance to build a stronger bond with clients or prospects if they implement it.

“At the moment, the introduction of any new technology, younger folks adapt faster,” Mr. Walper said. “It doesn't mean 20 year olds. It means 30 and 40 year olds, which is the sweet spot for financial advisers.”

Indeed, the survey found that 17% of investors 35 and younger and 11% of those ages 36-44 currently use a robo-adviser, compared with 6% of those 45-54, 4% of those 55-64 and 4% of those 65 and older.

Wealthy investors cited a number of reasons why they don't use robo-advisers. For example, 59% do not use them because they are too impersonal, while 36% simply do not trust them. Fifty-percent of wealthy investors prefer to meet their adviser face-to-face.

"Not every client wants the same sort of relationship with an adviser," Mr. Walper said. "But they still view getting help from advisers so advisers can provide the tools."

The Spectrem study broke down the 3,090 respondents in three categories: mass affluent, which is $100,000 to $999,999; millionaire, which is $1,000,000 to $4,999,999; and ultra-high net worth, which is $5,000,000 to $25,000,000.

“Advisers who don't take advantage of technology that is being created every year always runs the risk that they are not going to stay current,” Mr. Walper said. “It's an asset — not a threat.”


What do you think?

View comments

Recommended for you

Featured video


The #MeToo movement and the financial advice industry

Attendees at the Women to Watch luncheon commend the #MeToo movement for raising awareness about the issue of sexual harassment and bringing women together.

Latest news & opinion

Stocks plunge, advisers tell clients to hang tight

Though planners encourage calm, some are preparing investors for a correction.

Lightyear Capital's Donald Marron said to be in the hunt for Cetera Financial Group

The veteran brokerage executive, who bought Advisor Group in 2016, owned Cetera once before.

What to watch for next with the DOL fiduciary rule

Much hinges on whether the Labor Department appeals the 5th Circuit decision by April 30.

Social Security benefits losing buying power

Low inflation combined with rising Medicare costs threaten the adequacy of seniors' income.

Finra looks to streamline broker-dealer exams

CEO Robert Cook says three examination teams may be consolidated.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print