Investors expect robo-advice tools

According to Accenture report, “The Global Distribution and Marketing; Consumer Research”, more consumers would welcome Robo-Advice services to manage their banking, insurance and retirement. The survey that included nearly 33,000 consumers in 18 countries and regions revealed that the majority of the consumers are willing to accept exclusive “robo-generated” advice for certain banking, investment and insurance products.

71 percent of respondents to this survey are open to get robo-advice to assist them in the bank account selection. Approximately 78 percent of the consumers surveyed would allow Robo-Advisors to give them investment advices. Finally, nearly 68 percent of the respondents would authorize their retirement planning to be led by Robo-Advisors.

chart

The statistics behind this report expose an astonishing range of recognition and acceptance of these automated advice tools among people.

Plausibly Millennials are the main reason for this vast acceptance, the group that is about to reach their prime spending years. The economy is in their hands and the market will shape around their interests. They are digitally aware and prefer to perform their transactions online; commonly they do trust machines. This digital native generation might not currently have the highest assets among all generations, but the increment rate of their assets is predictably the highest. Though Millennials are not the only fans, surveys show a wider range of acceptance among retirees and general investment believers as well.

Pragmatically speaking, this range of acceptance promises more banks and financial firms to open their doors and to use Robo-Advice tools.

Genuinely the current (traditional) approaches to some of these operations (banking, insurance, et cetera) are not only costly but also rusty. Transparency, unbiasedness, time, are only some of the undeniable advantages of Robo-Advisors over the traditional style. This has fueled many firms already to incorporate this technology in their systems.

Although the common goal for those firms which focus on Robo-Advisors is ‘augmentation’, innovation remains a key separator.

Robo-Advisors  introduce new features to continuously fulfill their clients’ needs and to stay ahead of their competitors, for instance in January 2017 Wealthfront reintroduced “Selling Plan”. Selling Plan is an improved and automated process of selling concentrated stocks. It intends to diversify the portfolio more efficiently. Interestingly, the service which usually is available for executive accounts, was made accessible for all users with commission free regime. Moreover, Selling Plan prioritizes selling shares with lower tax rates.

Furthermore in this competition, we have witnessed more use of AI in Robo-Advisors.

Hedgeable’s “tax samurai” called Katana, an AI based tax management service designed for high net worth investors. This smart tax management feature will not execute any selling, unless it is tax efficient. Moreover Katana makes intelligence decision weighting tax efficiency with downside protection. Additionally Katana will automatically harvest losses for optimal tax alpha. Additionally this AI driven tool will provide tax-smart aggregation and tax friendly trading.

In summary one of the largest generation in the history is approaching its investing time; they understand, and they do welcome automation. What is specific to this group is its appreciations of fast and impactful tools, the features that Robo-Advisors use as their slogan. On the other hand there are new technologies introduced by Robo-Advisors and FinTech firms, especially more involvement of AI in order to smarten and shorten procedures. Additionally Robo-Advisors are more and more affordable.

These reasons together convince us of there will be upcoming increase of transformation to this technologies as well as more demand from the investors.

 

Share on LinkedInTweet about this on TwitterShare on FacebookShare on Google+