Bringing you live news and features since 2006 

Robo-advice appeals to higher earners

RELATED TOPICS​

The demand for robo-advice rises with income, despite it being widely seen as a low-cost financial advice solution, according to Deloitte, the business advisory firm.

Deloitte’s research shows over half (51 per cent) of people earning GBP45,000 to GBP70,000 would use a robo-adviser for investments, compared with just 30 per cent of those on incomes under GBP15,000. 
 
Gavin Norwood, insurance partner at Deloitte, says: “There is a significant financial advice gap in the market, where consumers have a need for advice but either can't or won't access it. Robo-advisers are low-cost and will increasingly be seen as a good alternative to face-to-face advice, especially where consumers have less complex needs.
 
“The need for affordable advice is growing as individuals are increasingly being tasked with managing their own pension pots and, in the context of a relatively low state pension, automated advice can play a key role in generating low-cost options to help. Our research suggests that robo-advice shouldn’t be exclusively aimed at those on lower incomes or that have smaller savings.” 
 
Deloitte’s research shows a significant potential for robo-advice to take off, with 15 million consumers willing to pay for an automated financial advice solution, confirming that in six key financial advice markets over a third of consumers would be willing to pay.
 
Demand is highest amongst millennials, but the research suggests other age brackets could be interested in using robo-advice. Over two-fifths (43 per cent) of 35-44 year old workers with a pension would use robo-advice on pensions, as would one-quarter (24 per cent) for the 45-54 year olds and a fifth (21 per cent) of those aged 55 and above. Also, 35 per cent of defined contribution pension holders – more than three million people – would be willing to pay for robo-advice to invest their pension pots, with demand highest (45 per cent) among those with the smallest pensions pots, many of whom cannot afford traditional advice.  
 
However, Deloitte’s research identifies some key barriers in consumers’ willingness to use robo-advisers.
 
Norwood says: "Whilst robo-advice can help close the financial advice gap, financial literacy and trust also have to be increased significantly. The industry needs to communicate the benefits of robo-advice in a simple and engaging way, for example, how robo-advice works in a safe and secure manner, the lower costs and convenience of 24/7 availability. Only then will people become as comfortable with disclosing their financial information to a ‘machine’ as a human.
 
“To-date robo-advice has focussed on investments, but its potential extends far beyond and the future looks bright as affordable and convenient automated advice users embrace its potential. In five to 10 years, we will probably not use the term ‘robo-advice’ as digital becomes the recognised channel.”

Latest News

Saving and investing app, Moneybox, has doubled the number of ETFs available on the platform, in the light of ‘growing..
Global X ETFs has announced the appointment of Ryan O'Connor as its Chief Executive Officer effective as of April 8, 2024. ..
Value-driven structured credit investing firm, Angel Oak Capital Advisors, LLC, has announced the completed conversions of two of its mutual..
Confidence in the continuing strength of bitcoin and Ethereum is driving wider interest in altcoins and other digital assets, according..

Related Articles

Jeremy Senderowicz, Vedder Price
Jeremy Senderowicz, a member of the Investment Services Group at law firm Vedder Price, has witnessed a steady upswing in...
Graham MacKenzie, Toronto Stock Exchange
The evolution of ETFs has been a multi-decade experience for Toronto Stock Exchange says Graham MacKenzie, managing director, Exchange Traded...
Frank Koudelka, State Street Global Services
ETF data provider and ETF Express data partner, Trackinsight, has published its Global ETF Survey 2024 Report: ‘50+ Charts on...
Cryptocurrencies
Matteo Greco, Research Analyst at Fineqia International writes that bitcoin (BTC) ended the week at approximately USD52,150, showing a notable...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by