Almost 70 per cent of Australians would not trust robo-advice delivered without human back-up, a new study has found.
According to the Investment Trends survey, most Australians (68 per cent) would only trust robo-advice “if follow-up customer service was available, such as assistance through a livechat service, phone or face-to-face”.
A white paper published by consultancy firm Mosaic Financial Services Infrastructure last year also found the ‘hybrid’ robo/human advice model was likely to emerge as the most popular approach globally.
Recep Peker, Investment Trends research director, said the result showed robo-advice firms required “good customer service” to build trust with clients.
“While younger potential users are more likely to trust and implement a recommendation without the need for human involvement, a multi-channel customer support is vital to get older investors over the line,” Peker said in a statement.
Robo-advice has been operational in Australia for some time with at least 10 firms offering some form of the service: some of which may cross the Tasman when the NZ market opens up further.
Under the current NZ legislation humans alone can deliver ‘personalised’ financial advice. However, the Financial Markets Authority (FMA) can now grant digital-advice exemptions ahead of a law change – expected to take effect next year – that will grant robots full advisory status.
Almost two months after the FMA opened for exemptions just one robo-advice application has been filed.
The Investment Trends survey found a significant proportion of Australian investors (22 per cent) were aware of robo-advice – at a similar level to UK but lagging the 39 per cent result among US consumers.
Investment Trends tapped the opinions of 10,000 online investors and 1,425 financial advisers over February and December last year for the survey, which covered multiple jurisdictions, including: Australia, the US, the UK, Spain, Germany, France, Singapore and Hong Kong.
As well as heightened awareness of robo-advice, the Investment Trends report says a growing number of older Australians are turning on to the digital financial service.
While the less-wealthy ‘millennials’ dominate the digital advice clientbase, 40 per cent of online share investors aged 55-64 and 36 per cent of the 65-plus cohort would consider using robo-advisers, the survey says.
“The Australian financial services industry is ripe for disruption, as more and more investors take notice of digital advice solutions as an alternative to traditional advice models,” Peker said.