Wealth managers underestimating HNWI appetite for robo-advice

Wealth managers are significantly underestimating the propensity of ultra high net worth individuals to make use of automated advice services, the World Wealth Report 2015 shows.

Wealth managers underestimating HNWI appetite for robo-advice

According to the report, released today by RBC Wealth Management and Capgemini 48.1% of HNWIs globally said they would consider having a portion of their wealth managed by an automated advisory service, while only 20% of wealth managers were of the view that their high net worth clients would do so.

The highest differential was found in the Asia ex-Japan region where 76.3% of HNWIs said they would do so, compared to 19.3% of wealth managers, while the lowest gap was in North America where the propensity to use such services is only 33.5%, while only 17% of wealth managers thought their clients would do so.

In the UK, the number is 41.6% for HNWIs, which is below the global average, with only 24% of wealth managers of the opinion their high net worth clients would be interested.

Perhaps more interesting, however, is that the discrepancy broadens out, when one looks at younger UK HNWIs (those below 45 years of age), 69.4% of whom said they would be interested in such services, compared with 26.6% of UK HNWIs above 45.

According to the report: “Wealth managers are skeptical of automated advisory services, noting that they forgo the personal relationships that enable wealth managers to build trust and deliver tailored advice and solutions. However, some forward-thinking firm executives are beginning to acknowledge that automated services will increasingly have a place in the wealth management space.”

The report adds: “Automated advisory services do not appear to be a passing trend, given the degree of interest from younger HNWIs. In keeping with their preference for digital collaboration, HNWIs under 45 are much more inclined to take advantage of automated advice (67%) compared to those over 45 (38%).