Eighty-five per cent of Americans prefer working with a human financial advisor rather than a robo advisor, according to a new survey commissioned by Million Dollar Round Table (MDRT), a global association for financial advisors.
The survey, conducted online by The Harris Poll, also found that 88 per cent of Americans say technology should complement, not replace, the services of a human financial advisor. At the same time, whether they currently work with a financial advisor or not, those surveyed agreed that it is important that advisors are both technologically savvy (95 per cent each) and use updated technology-based tools in their practice (96 per cent who have an advisor and 95 per cent who don’t have an advisor).
Asked if financial planning should be managed entirely by technology-based tools, just five per cent of respondents agreed. Meanwhile, 36 per cent strongly disagreed that robo advisors could completely replace the role of human financial advisors in financial planning.
A strong majority of those surveyed (83 per cent) said they would trust a human financial advisor to effectively manage their financial plan, while 36 per cent said they would trust a robo advisor.
Building a trusting relationship
The opportunity to build a trusting relationship was the top benefit cited by Americans for working with a human financial advisor over a robo advisor (65 per cent), followed by a high level of human interaction (58 per cent) and ease of communication (52 per cent).
Cost topped the main concerns that respondents had about working with a human financial advisor (47 per cent). This was followed by response time (32 per cent) and accuracy of assessments (31 per cent).
Minimized risk of human error was the top benefit cited for using a robo-advisor (49 per cent). The main concern of robo-advice was lack of two-way conversational communication (58 per cent).
“Though robo advisors have become more prevalent in the financial advisor industry, it’s vital to note that the majority of clients still desire human interaction and communication,” said Ross Vanderwolf, CFP, MDRT President. “This means that we, as financial professionals, should make every effort to cultivate client relationships in order to further promote the benefits of working with a human advisor.”
Complementing advice with technology
Of those respondents who presently work with a human financial advisor, 94 per cent stated that it’s important that advisors use software to model financial outcomes, while 80 per cent believe cloud storage is a necessity for advisors to use in order to manage their business and 72 per cent want an internet platform for scheduling appointments.
However, only 48 percent of respondents said their advisor uses software to model financial outcomes, while only 32 percent say their advisor uses an internet platform for appointment scheduling and only 28 percent indicate their advisor uses cloud technology.
“This study suggests Americans have not outgrown human advisors; instead their preference lies in combining the personal and trustworthy touch of an advisor alongside cutting-edge technology,” said Regina Bedoya, CLU, ChFC, MDRT First Vice President. “An integration of tradition and tech will provide Americans an even brighter financial outlook.”