Robo-advice created controversy last week when markets crashed, causing a temporary shutdown or stalling of access to several major digital platforms.
Despite the inherent possibility of usage interruption (as with almost anything digital), new research from Cerulli Associates nonetheless confirms a growing interest in the technology—particularly among younger investors.
The interest, in fact, outpaces action in U.S. digital advice, representing opportunity for a number of firms.
The study “found a clear inverse relationship between an investor’s age and their willingness to engage with purely digital platforms,” Scott Smith, director at Cerulli, said in a statement. He added that since 2015, “there is greater openness to digital advice relationships, but a strongly negative correlation between age and interest remains.”
Results of the study indicate that 30- to 39-year-old investors are enthusiastic about digital financial advice, while interest among investors ages 70 and up gradually declines. While fairly intuitive that younger cohorts are more prone to adopt emerging tech, the study showed that age is only one of the numbers that count in this instance.
Interestingly, those in higher wealth tiers—regardless of age—were more open to digital advice. Smith explained why this may be the case: “[I]nvestors with more than $2 million of investable assets express substantial increases in their willingness to engage with digital providers.”
He went on to say “higher-net-worth investors are more aggressive in adding to their total number of advisory relationships, including digital, as a form of provider diversification.”
Of clients age 70 or older, more than 25 percent who are worth $2 million to $5 million expressed a willingness to consider engaging exclusively online. But Smith contests that even investors interested in online platforms often have a desire for guidance from “a traditional human advisor.”
The takeaway, according to Smith, appears to be this: “There is an opportunity for advisors to maximize their addressable market and investor satisfaction by developing platforms that can seamlessly move between digital and human advice.”
Jessica Claeys is an editor, writer, and graphic designer, who has been creating both print and digital marketing and communications content for 10+ years.
Jessa Claeys is a licensed insurance producer in the state of Colorado and an insurance editor for Bankrate. She currently covers auto, home and life insurance with the goal of helping others secure a healthy financial future. Jessa has over a decade of experience writing, editing and leading teams of content creators. Her work has been published by several insurance, personal finance and investment-focused publications, including BiggerPockets, 401(k) Specialist, BP Wealth and more.