The emotional value of financial advice from human advisers is its primary advantage over robo-advice, according to new research from Vanguard Australia.
The investment house’s investigation found clients were more loyal to human advisers and 93 per cent of human-advised clients would not consider switching to digital if they had to leave their current adviser, while 88 per cent of digital advice clients said they would consider human advice in the future.
The finding stems from a survey of 1158 United States investors in July 2021 who reported they had either a human adviser (75 per cent of respondents) or digital advice service (25 per cent of respondents) and at least $100,000 in investable assets at the time of the survey.
Respondents also stated the emotional support provided by a human adviser accounted for 25 per cent of the value clients receive from the relationship, compared to 18 per cent with digital advisers.
Vanguard Australia head of intermediary Rebecca Pope said the survey found investors reported having stronger peace of mind after working with human advisers compared to working with a digital advice service.
“It’s evident that clients are deriving significant value from advice and benefiting from the investment expertise and coaching that professional guidance can offer. From improving investment returns to achieving individual goals to emotional reassurance, advisers are here to help,” Pope said.
The survey found that while portfolio management was worth 47 per cent of the value clients receive from a digital advice relationship compared to 40 per cent with a human adviser, the financial value was 35 per cent in both categories.
Additionally, Vanguard found investors who used human advisers estimated being $160,000 closer to achieving their financial goals compared with $50,000 for digital advice clients.
As a result, it noted that while clients want emotional support from human advisers, they prefer portfolio tasks to be delivered digitally and both of those functions had a place in the provision of advice.
“Understanding advice delivery preferences is crucial for Australian advisers, many of whom are time poor and resource constrained,” Pope said.
“If advisers can segment their business to understand what delivery method their clients prefer for what tasks, they can then use digital advice to automate particular services to help save time and costs, and ultimately bridge the gap between advice supply and demand.”