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Be Advised, Advisor: Here Come The Robos

Nearly 60 Percent of Americans Expect to Use Robo Advice by 2025

A new Charles Schwab study examines consumer comfort level with new technology, particularly with regard to how they invest… and with whom.

November 01, 2018 — SAN FRANCISCO–(BUSINESS WIRE)–Charles Schwab has published a new report, “The Rise of Robo: Americans’ Perspectives and Predictions on the use of Digital Advice,” that examines people’s outlook on robo advice, its potential impact on how they invest, and its impact on the financial services industry overall.

According to the report, the expectation that robo advice will play a significant role in shaping the investing landscape spans generations from millennials to baby boomers. At the same time, most investors also acknowledge the critical role human advisors will play into the future.

“Robo advice is the ultimate equalizer – it democratizes investing by improving the process and price,” says Cynthia Loh, Charles Schwab vice president of digital advice and innovation. “But along with all the benefits of automation, the desire to use a combination of technology and access to a professional when needed is clear – and that desire is consistent across age groups and types of investors.”

Excerpts From The Report ‘Rise of the Robos’

In this new report, Charles Schwab examines Americans’ outlook on robo advice – its potential impact on how they invest and the financial services industry overall, the perceived benefits, and what factors make them more likely to consider an automated investing service. The report also digs into current robo advice users across the U.S. – who they are, where they are, and what they think about the services they’re using to reach their investing goals. This report reveals generational trends around the use of robo advice, in particular what baby boomers think of using technology and automation to invest. While millennials are the primary robo advice power-users today, boomers see a significant opportunity to automate a portion of their investing in the future.

Despite the benefits of automation with a robo advisor, it is clear that Americans still see value in the ability to interact with a person when needed. Seventy-one percent of people want a robo advisor that also has access to human advice and nearly half (45 percent) not using a robo advisor today would be more likely to use one if it has quick and easy access to human support. Even among millennials, 79 percent want a robo advisor that also provides access to human advice.

Beyond investing, 42 percent of boomers are more comfortable relying on technology than people to answer questions and solve problems, and boomers also report that technology has helped them improve their financial lives: 51 percent say technology gives them more confidence of mind when it comes to finances and 44 percent say technology has helped them reach financial goals. Although robo advice is often thought of as a tool primarily for younger investors, older generations see the appeal as well. In fact, nearly half of baby boomers using a robo advisor today say the service is perfect for their life stage. Among all boomers, 62 percent agree that robo advice takes the emotion out of investing, nearly half (49 percent) say it helps them maintain a diversified portfolio, and 46 percent trust robo advisors to provide more transparent financial advice.

Key findings in the report include:

  • People see a significant opportunity for robo advice to change the way they invest
    • Fifty-eight percent of Americans expect to use a robo advisor by 2025
    • Forty-five percent of Americans say robo advice will be the technology that ultimately has the biggest impact on financial services
  • Most people still want a robo advisor that lets them interact with a person
    • Seventy-one percent of people want a robo advisor that also has access to human advice
    • Among millennials nearly 80 percent want a robo advisor that provides access to a person
  • While millennials are the biggest power users today, baby boomers see significant appeal in robo advice
    • Nearly half of boomers using a robo-advisor (46 percent) say robo advice is perfect for their life stage
    • Forty-five percent of boomers overall expect to use a robo advisor by 2025
  • The current snapshot of U.S. robo advisor users cuts across a broad range of investor types
    • Sixty percent of current U.S. robo users are millennials; nearly a quarter are gen X
    • More than half of robo users are female
    • Current robo advice users are two-times more likely to say managing their investments is extremely easy (compared to non-users)

The full report is available here.




About Schwab’s Consumer Digital Demands Survey
This report is based on an online study conducted by independent research firm Edelman Intelligence among 1,000 U.S. general population adults and 391 robo advisor users over the age of 18 between July 25, 2018 and July 31, 2018. General population respondents were weighted to be nationally representative based on most-recent U.S. Census data. Robo advisor users were collected based on mix of natural fallout among general population and oversample; users were identified through self-selection of at least one robo advisory platform. The study has a margin of error of ±3.1% at a 95% level of confidence.
About Charles Schwab
At Charles Schwab, we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity. More information is available at www.aboutschwab.com. Follow us on Twitter, Facebook, YouTube and LinkedIn.