Wealthiest clients will use robos — but want human advisers as well: LinkedIn survey
While open to using robos for basic investing, they want traditional wealth managers for complex needs.
Most of the nation’s high-net-worth individuals, those with more than $1 million in investible assets, are not choosing between a robo adviser or a human adviser. They want the best of both worlds — technology plus the hand-holding of a human being.
That is one of the takeaways from a new study by LinkedIn that looked at the attitudes of HNWIs when choosing a wealth manager. Such attitudes are important as the study found that nearly 20% of HNWIs plan to change their wealth manager within the next 12 months.
Millennials are the most apt to replace their adviser, with 38% saying they are planning to do so; 28% of Generation Xers plan on it, while only 8% of baby boomers are planning to make such a change. That is significant, however, since by 2020 millennials and Generation X will control $30 trillion, or half of all investible assets, according to the study.
(More: Adviser pricing for ultrawealthy clients is under pressure)
Referrals are the No. 1 way HNWIs hire an adviser, with nearly 50% looking to family and friends for a recommendation. Millennials, however, are less concerned with reputation and brand and look to other metrics and sources of information. One-third of them use social media profiles as part of their evaluation, compared with only 10% of HNWIs of all other age groups.
(More: Wealthy families boost private equity bets in reach for yield)
While access to a robo-adviser is not critical for an HNWI in selecting an advisory firm — only 3% of the survey respondents said it was part of their decision-making process — the wealthiest HNWIs, or those with $10 million of investible assets, are open to using robos for basic investing while depending on human advisers for more complex investing needs.
“Our analysis has found that it is becoming more common for those with over $10 million in investible assets to automate the foundation of their invested dollars,” the study stated.
(More: Global Family Office Report)
“I think all high-net-worth individuals will have a significant proportion of their wealth held by a robo-adviser for a combination of low cost, tax efficiency, and convenience,” said Dan Egan, director of behavioral finance and investing at Betterment, a robo-advisory company. [But] they will continue to have financial planners and advisers who add value through the holistic relationship.”
Learn more about reprints and licensing for this article.
