MDRT Study Finds Consumers Want Technology To Complement, Not Replace Human Advisors

PARK RIDGE, Ill. (Feb. 18, 2019) — A new study, commissioned by MDRT and conducted online by The Harris Poll among over 2,000 U.S. adults, examines what consumers think of technology in financial services, clients’ perspectives on robo advisors and the technology they expect their advisor to incorporate. Whether they currently use a financial advisor or not, about the same percentage of Americans in each group agree it is important that advisors are both technologically savvy (95 percent each) and use updated technology-based tools in their practice (96 percent who have an advisor and 95 percent who don’t have an advisor).

The majority of Americans (88 percent) say technology should complement, not replace, the services of a human financial advisor, with 85 percent of Americans stating they prefer working with a human financial advisor rather than a robo advisor.

Only five percent of Americans believe financial planning should be managed entirely by technology-based tools and 36 percent strongly disagree that robo advisors could completely replace the role of human financial advisors in financial planning. The study found that, while 83 percent would trust a human financial advisor to effectively manage their financial plan, only 36 percent would trust the job to a robo advisor.

The Human Advantage

The top benefit Americans cite for working with a human financial advisor over a robo advisor is the opportunity to build a trusting relationship (65 percent), followed closely by the high level of human interaction (58 percent) and ease of communication (52 percent). The main concerns of working with a human financial advisor are cost (47 percent), response time (32 percent) and accuracy of assessments (31 percent).

The top benefit of working with a robo advisor over a human advisor, according to Americans, is minimized risk of human error (49 percent). The main concerns are lack of two-way conversational communication (58 percent), minimal human interaction (48 percent) and breach of data, including personal (46 percent) and financial (44 percent).

“Though robo advisors have become more prevalent in the financial advisor industry, it’s vital to note that the majority of clients still desire human interaction and communication,” said Ross Vanderwolf, CFP, MDRT President. “This means that we, as financial professionals, should make every effort to cultivate client relationships in order to further promote the benefits of working with a human advisor.”

Technology As A Tool

Ninety-four percent of Americans who currently work with an advisor say it’s important that advisors use software to model financial outcomes; 80 percent believe cloud storage is a necessity for advisors to use to manage their business while 72 percent want an internet platform for scheduling appointments. In reality, however, only 48 percent of Americans with a human financial advisor state that their advisor uses a software to model financial outcomes, 32 percent say their advisor uses an internet platform for appointment scheduling and only 28 percent indicate their advisor uses cloud technology.

About a third of Americans (31 percent) have concerns that human advisors might not be accurate in their financial predictions and nearly half (49 percent) list minimized risk of human error as a benefit of working with a robo advisor versus a human advisor. Advisors who use software to model financial outcomes can mitigate this concern. Thirty-two percent of Americans list not receiving a quick response as a concern of working with human financial advisors. Advisors who implement an internet platform for scheduling appointments can sate this worry while also providing their clients with ease of communication.

A New Opportunity

When it comes to hiring a financial professional or using technology, millennials (age 18-34) are split. About half (52 percent) would trust a robo advisor to effectively manage their financial plans, while the remaining 48 percent would not. Millennials are also twice as likely as some of their older counterparts (ages 45+) to agree that robo advisors could completely replace the role of human advisors in financial planning (38 percent vs. 17 percent).

“Understanding what millennials value allows us to grow and streamline our services to appeal to the next generation of clients,” added Vanderwolf. “Advisors who can cater to millennials’ technology-based needs while also highlighting the benefits of working with a human advisor will have a winning edge.”

Of those millennials who do use a human financial advisor, the majority prefer their advisor use various technology-based tools to manage their business. An internet platform for scheduling appointments is important to 84 percent of millennials with an advisor, and 78 percent state a platform to host virtual meetings is a priority.

“This study suggests Americans have not outgrown human advisors; instead their preference lies in combining the personal and trustworthy touch of an advisor alongside cutting-edge technology,” said Regina Bedoya, CLU, ChFC, MDRT First Vice President.

“An integration of tradition and tech will provide Americans an even brighter financial outlook. By keeping advisors abreast of client desires and technology’s ever-increasing capabilities, MDRT stands poised to assist advisors in ushering in the future.”