There is good news for advisors who use technology to serve their clients. A recent CFA Institute study titled ‘The Next Generation of Trust’ found that retail investors prefer advisors who use technology to robo advisors.
The survey covered 3,127 retail investors and 829 institutional investors worldwide, including 100 retail investors and 84 institutional investors from India.
Globally, 72% of retail investors say they are more likely to trust a recommendation from a human than from a robo-advisor. “The subsectors within financial services that provide clients with more personal familiarity, such as financial planners, are more trusted, while robo-advisors are trusted least,” said the survey.
The survey recommends advisors to use technology to build trust among their clients. “Technology itself does not augment trust, but it can facilitate it. Technology enables professionals to provide investors with valuable information and services, in an efficient and consistent way, which can influence trust. The survey suggests a strong link between use of technology by financial advisors and increases in trust, and this is especially true among younger investors.”
Citing the reason for not trusting online advisors, the report pointed out many investors believe that the chances of cybercrime and data breach are very high in the robo advisory model. The report said, “Investor expectations surrounding cybersecurity are high and significant satisfaction gaps remain regarding the ability of advisors and asset managers to protect data consistently.”
