As technology continues to
change the investment landscape, a new Merrill Edge report has found
that nearly 40% of mass affluent Americans are comfortable consulting
artificial intelligence for financial advice.
But that’s not all.
“Americans are more likely
to trust AI with their finances than trust it to drive a car (28%), post to
social media (28%) or select a wardrobe (26%),” the report, which was released
last week, says.
While Gen Zers (those age 22
and younger) are the highest adopters of emerging technologies, the report
shows that mass affluent investors of all ages are willing to have digital
tools at their disposal, with one in five preferring digital advice over in-person
That said, investors still
value professional expertise over friends and families. Merrill Edge reports
that “more investors are turning to professionals like financial advisors (81%)
for counsel than their wealthiest friends (70%), older generations (69%),
parents (66%) and friends (57%).”
“There has been a rising
adoption of digital advice among our clients,” says David Poole, head of
Merrill Edge Advisory, client services and digital capabilities. “We have a
spectrum of tools to support different types of engagement. But we are seeing
an increase in digital-only engagement across all demographics.”
But don’t expect robo
advisors to fully replace their human counterparts anytime soon. Poole says the
hybrid approach is still the way to go. “We have clients who are comfortable
with human advisors. We also have clients who are comfortable with digital-only
advice. The clients are always in the driver seat, and that allows them to
decide what works out best for them.”
With artificial intelligence
making steady inroads in finance, the challenge lies in using these emerging
technologies to not just give the firms a competitive edge, but also employ big
data to better serve clients with a variety of financial planning tools that
could augment decision-making.
“You are only as good as the
data you have,” says Denise Valentine, a senior analyst at research firm Aite
Group. “If your data isn’t good, your results are going to be bad. This is why
human advisors are absolutely necessary. Having a person to talk to when you
are concerned about your financial future is pretty relevant.”
The survey, which was
conducted by Convergys in April 2018, polled 1,000 mass affluent respondents
across the U.S.
here for the original article form Financial Planning.