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PERSPECTIVES


The future of financial advice: Humans+bots

Investors prefer the best of all worlds
 

New Accenture research of more than 1,300 investors shows that the future of wealth management is not a choice between humans and robots. It is, instead, the best of both worlds—the low cost and analytics inherent in robo-advice, combined with the nuanced human touch for more complex or sensitive wealth management situations.

What are investors looking for from their wealth management firm in terms of an advice model?

While most are happy with their current models, our latest study shows Millennials and Gen Xers already tend to use mainly a hybrid model, while 68 percent of Emerging Wealthy and High-Net-Worth investors already prefer hybrid models to a traditional advice model.

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Kendra Thompson
Wealth Management Lead
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Why does a hybrid model rank so highly with investors?

We found that combining the best of both worlds—the low cost and access of robo-platforms with an advisor’s expertise in handling more nuanced or complex investing scenarios—hybrid firms ranked higher than all others in several dimensions critical to customer loyalty and satisfaction, from “customized service” to “low-cost products.” In addition, almost four in every 10 investors said they would never take advice from their financial advisor without first consulting another source. For Millennials, that number jumps to five in every 10 investors.

A human advisor (even if advice is provided virtually) is on the other hand still seen by a slight majority (51 percent) as the most reliable for new investment ideas according to our survey. And 57 percent of investors felt human advisors (virtual included) provided the best customized advice. But, investors across the board liked the low cost of robo-advice and 44 percent told us that human advisors do not provide sufficient value for what they charge.

How does a wealth management firm determine the appropriate mix of advice models?

A spectrum of advice, priced by use or complexity, is the wave of the future. Investors want choices. Overall, they seem to want a robo-platform with periodic or as-needed access to a human advisor—and they want to pay according to their use of each. There is no one-size-fits-all model. Flexibility is the name of the game.

Does the hybrid advisory model change aspects of the client relationship?

Hybrid model clients actually tend to be more engaged than clients in other models, according to this latest Accenture’s research. They are significantly more likely to seek their advisor’s assistance in financial planning than investors in any other model (64 percent versus 44 percent).

Hybrid model clients are also among the most likely investors to have discussed family needs with their advisor, including long-term financial needs of parents (58 percent), children’s financial needs (67 percent), inheritance (57 percent) and estate/tax planning (42 percent).

And finally, hybrid models are attracting a younger, more affluent, better educated investor base, suggesting that those models have the potential to become a dominant, “high-share” model within the industry.

Overall, moving to a hybrid model seems to increase the depth and breadth of the client relationship—a win/win.

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