Digital advice platforms have been around for years, but affluent investors haven’t taken much notice
They say you should invest in what you know. If that’s the case, robo advisors that want to attract affluent investors may want to try harder at getting recognized.
In a new survey from Cerulli Associates and Phoenix Marketing International, 59% of responding investors — including affluent US households with more than US$250,000 in investable assets and the near-affluent who earn above US$125,000 and are under age 45 — indicated no familiarity with any one of 10 listed robo advice firms.
Adding to the challenge is the fact that investors who engage with one provider rarely seek out information on another, unless they’re actively looking for a new one or facing a “money in motion” event like a job change or getting an inheritance.
The digital advice platforms were somewhat well-segmented into two groups, based on respondents’ overall awareness of their platform. The higher-awareness tier, comprising those that garnered more than 10% overall awareness, included platforms affiliated with strong wealth-management brands like Fidelity, Charles Schwab, Merrill Lynch, and Vanguard. Betterment, an exclusively digital investment platform that’s invested significantly in ongoing marketing efforts, also made an appearance in the high-awareness tier.
The survey also highlighted the popularity of digital advice among younger investors compared to older ones. In terms of overall awareness, the percentage of respondents answering “none of the above” grew consistently from 34% among those under age 30 to 75% among those who were at least 70 years old.
The research also examined the potential for current participants in the digital advice market to add investors onto “hybrid” options on their platforms. Investors whose investable assets were between US$100,000 and US$250,000 were the strongest prospects, with 39% saying they were either Very Likely or Somewhat Likely to consider using an advisor-assisted wealth manager.
The opportunity dropped off significantly as investment assets increased: only 17% of households in the US$250,000-US$500,000 bracket said they were Very Likely or Somewhat Likely to use hybrid advice platforms. The percentage decreased further for US$500,000-US$1 million households (16%) and US$1 million-US$2 million households (15%).
“Overall, 19% of investors consider themselves very or somewhat likely to consider using this type of platform, with somewhat likely garnering approximately three times the number of responses as very likely,” the report said.
Follow WP on Facebook, LinkedIn and Twitter
Related stories:
Robo-advisor use expected to hit 60% by 2025
Robo-advisors will have greater impact than cryptos say consumers
