Government research body finds there's hard days ahead for robo-advisors
For robo-advisors in Australia, the hard work still lies ahead. But the younger and richer offer a way forward.
Robo advisors have a long way to go to win over the Australian public’s trust, but those most likely to be won over are the young and the rich.
According to a new study from CSIRO, the government research body that created wireless internet, young and poor Australians cannot be bothered getting financial advice. Partly because they have little money to get advice on and partly because they cannot afford professional advisors.
Their lack of interest is so profound that it extends to superannuation, even though super makes up the second largest chunk of their wealth (after the property they own).
While this might seem like fertile ground for robo-advice, CSIRO found that Australians were slow to take the bait.
“Robo-advice could help people learn, and try out different scenarios, without the worry of appearing ignorant to a person,” the report concluded.
“Unfortunately, our experiment found little evidence for this – overall levels of motivation, and perceptions of autonomy and competence were unchanged.”
The study, which presented people with an online savings calculator as a proxy robo-advisor, found that the young and the rich might be open to the possibility of using new technologies to get cheap advice. But the open-minded were few in number.
“Overall expectations for [robo-advice] are generally quite low. This low rating indicates that the superannuation industry has a considerable hurdle to overcome in engaging users with [robo-advice] for superannuation decisions,” the study said.
Despite the obvious impliciation, there was no suggestion that blue-sky forecasts of robo-advisors conquering the world could be wrong.
On an interesting tangent, the report noted that while the consequences of robo-advice’s effects on employment may be “far-reaching” – they might not be negative.
Using ATMs as an historical example, the study noted that while ATMs gutted jobs for bank tellers, banks used the productivity gains to employ more people. Meaning banks became bigger employers as a result of ATMs. The same could prove true of robo.
This article first appeared on www.roboadvicenews.com