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Robo-advice growth? – why robo-advice has low consumer appeal
Despite all the FinTech marketing proclaiming robo-advice growth, across the generations an average of only 1% of consumers are using robo-advice for arranging their investments, according to a GlobalData survey.
The GlobalData international survey found a consumer’s main bank still holds strong as the favoured option for arranging investments. This trend generally holds true across generations and geographies.
When refined by generations globally, 35% of millennials, 33% of Generation X, and 28% of Baby Boomers use their main bank when arranging investments.
This proves a general consensus that although there are plenty of other options, a client’s main bank still holds the most value.
The next most popular option across all generations is to self-arrange investments.
The GlobalData survey said a total of 19% of Millennials choose to arrange their own investments with 27% of Generation X also preferring this option.
There are some markets that use other options more than their main bank. For example, only 17.3% of retail investors in the US use a financial planner at their main bank, with 20.3% opting to arrange investments themselves.
The low popularity of robo-advice across the generations could be viewed as a reflection of the nascent state of the robo-advisory industry.
Ultimately, while there may be a lot of focus on new technologies such as robo-advice, it is important not to forget just how important banks are in arranging investments.
There will no doubt be a place for for some pureplay robo-advice companies, but realistically it is more likely that banks will will make use of automated investment services to run alongside their traditional face-to-face advisory capabilities.
The true opportunity for robo-advice companies lies in selling their technology to banks – and right now consolidation and white-label opportunities abound.
The GlobalData 2017 survey was conducted online in Q2 2017 among 27,000 consumers in 27 markets.
The countries surveyed were Australia, Belgium, Brazil, Canada, China, Denmark, France, Germany, Hong Kong, India, Italy, Indonesia, Malaysia, Mexico, the Netherlands, New Zealand, Norway, Poland, Russia, South Africa, Spain, Singapore, Sweden, Taiwan, the UAE, the UK, and the US.