The demand for automated investment services is strongest in the United States and women are more likely to adopt robo-advice than men, a report has revealed.
According to Investment Trends’ latest “Robo-advice Report”, US providers of automated investment services are leading the way in the provision of robo-advice, with 23 per cent of online investors in the US using robo-advice services compared to 7 per cent in Australia.
“The US robo-advice market leads in adoption levels and range of offerings. But US robo-advice providers have not stood still as they continue refining their offerings – specialist fintech providers are getting better at being banks, while the established wealth brands are getting better at becoming fintech firms,” Investment Trends research director Recep Peker said.
“While collective primary online investor relationships in the US market are evenly split between the established wealth brands and fintechs, the common recipe for success among all successful robo-advice providers is their ability to deliver a diversified portfolio and demonstrate tangible time and cost savings to their customers.”
The survey, based on almost 20,000 online investors across Australia, the US, the United Kingdom, Spain, Germany, France, Singapore and Hong Kong, also revealed female online investors were more likely to use robo-advice services than men.
It found 29 per cent of US female online investors were using robo-advice compared to 22 per cent of their male counterparts, and 40 per cent of Australian female online investors said they would consider adopting robo-advice services in the future compared to 36 per cent of Australian male online investors.
“Providers that intend to satisfy the strong latent demand for robo-advice among women investors will do well to understand the distinct needs and priorities of these investors,” Peker noted.
“When selecting a robo-advice provider, women online investors are more likely than men to prioritise the user interface (55 per cent versus 49 per cent) and education initiatives (40 per cent versus 34 per cent), but are less likely to focus on fees (41 per cent versus 53 per cent).”
The report found the demand for micro-savings automated services, specifically micro-saving and investing app Raiz, was also gaining traction in Australia, despite trailing the US in the overall adoption of robo-advice.
“Raiz’s popularity highlights the appeal of micro-savings functionality among Australian investors. For other robo-advice providers, brand awareness appears to be an issue, with less than 12 per cent of Australian online investors saying they are aware of providers like Stockspot, Spaceship Voyager, Clover or Sixpark, respectively,” Peker added.
“Nonetheless, there is significant scope for growth, with 38 per cent of Australian online investors considering using robo-advice in the future.”
