A “robo” opportunity in wealth management

The wealth management industry is ever-changing. We’re often asked by advertisers for information regarding these shifts and how marketers can best respond to these changes.

We’ve seen an uptick among finance brands interested in robo-advisors, which are platforms that use algorithms to manage investment portfolios. One of the newest wealth management technologies available, these offerings are growing at a tremendous speed. In fact, Business Insider estimates that by 2020 robo-advisors will manage over $8 trillion in assets worldwide.

To help marketers better understand consumer preferences and attitudes concerning robo-advisor offerings, we commissioned an online survey among 632 individuals who shopped for a brokerage account during the past 18 months. Here’s what we learned:

The robo-advisor market is nascent

Among consumers we interviewed that had recently opened a brokerage account, nearly half (43%) were unaware of robo-advisor offerings and only 1 in 7 had a robo account. Awareness was even lower among total brokerage shoppers where a majority (57%) were not aware of automated brokerage service accounts and robo-advisor offerings.

57% of brokerage shoppers aren't aware of robo-advisor offerings

Consumers are young, affluent, and reliant on technology

The median age for robo-advisor account holders is 36, which is significantly lower than the median age of 44 for total brokerage shoppers. The median household income for robo account holders was more than twice that of brokerage shoppers ($175K vs $88K). Additionally, 50% of robo-account holders consider themselves to be early tech adopters.

Robo Account Holders: Median HHI was more than twice brokerage shoppers

Motivated by lower costs and influenced by digital media

While holders of robo-advisor accounts are affluent, they are still largely motivated by cost savings. 36% began brokerage shopping to look for lower transaction costs. 1 in 5 needed a lower minimal investment to open an account. 25% were triggered to shop by an online ad, and 85% shopped for brokerages on a smartphone.

25% of robo-advisor account owners were triggered to shop by an online ad; 85% shopped on a smartphone

Almost three in five (58%) robo-advisor account holders said they were likely to use a personal advisor either in addition to or to replace their current robo-advisor account(s) in the next year. And, 58% of robo-account holders indicated that they prefer to use a robo-advisor with a firm that they recognize rather than an independent robo-advisor firm.

So what are the implications for advertisers?

  • To capture a piece of the robo-advisor market, brands need to do a better job of building awareness of their robo-advising offerings and providing education around these services.
  • Since the robo-advising audience is heavily reliant on tech, advertisers should focus on online and mobile channels to get their message in front of prospective clients.
  • Ad messaging should be customized with robo-advisor offerings that appeal to a young, cost-sensitive audience.
  • Traditional brokerage providers have an advantage over pure-play robo-advisor firms and should work to upsell and cross-sell brokerage offerings among existing clients.