INVESTORS ATTITUDES

TOWARDS ROBO-
ADVISORS
EVIDENCE FROM THE US
AND THE UK

Data - Analysis Implications and Learnings

May 2016

Report Extract
Original Report with 48 pages
Plus full set of US and UK survey data
as Powerpoint Slides and Excel file

Carmela Melone
Analyst

www.MyPrivateBanking.com
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CONTENT TABLE

1.0 EXECUTIVE SUMMARY 4

2.0 METHODOLOGY 7
2.1 REPORT OBJECTIVE 7
2.2 SURVEY SAMPLE 7
2.3 DEMOGRAPHICS 7
2.4 AMOUNT OF INVESTABLE ASSETS CURRENCY CONVERSION 8
2.5 SURVEY QUESTIONS 8
2.6 DATA ANALYSIS 9

3.0 INTRODUCTION 10
3.1 UK AND U.S. BREEDING GROUNDS FOR ROBO ADVICE 12

4.0 MAIN FINDINGS 16

4.1 US FINDINGS: INVESTORS ARE PREDOMINANTLY SELF-DIRECTED WITH A
MIXED PICTURE IN TERMS OF SUPPORT FROM AN ONLINE INVESTING PLATFORM 16
4.2 UK FINDINGS: THE YOUNGER UK INVESTORS ARE, THE MORE MIXED THEIR
INVESTMENT APPROACH 23
4.3 THE BIG PICTURE MILLENNIALS ARE RE-SHAPING THE INVESTMENT LANDSCAPE 33

5.0 INVESTORS VIEWS ON ONLINE INVESTMENT TOOLS:

KEY TAKE-AWAYS 35
5.1 DATA RESULTS IN A NUTSHELL 37
5.2 IMPLICATIONS / LEARNING POINTS 38

APPENDIX 39
SURVEY QUESTIONNAIRE 39
PROVIDERS OF ROBO-ADVISORS 44

AUTHORS 47

DISCLAIMER 48

To order the full report, please click here.

INVESTORS ATTITUDES TOWARDS ROBO-ADVISORS 2

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TABLE OF CHARTS
Hybrid online investment services key benefits 11
Current robo market coverage 12
The growth of the robo-advisor market 13
How robo-advisor terms are trending on Google 14
US investors willingness to pay for robo vs. human financial advice 17
Robo-advisor brand awareness in the US 19
Desirable technical features of online investment tools 21
Peoples view about replacing in-person advice with digital communication tools 22
UK investors investment experience by age segment 25
How UK investors interact with their financial advisors/institutions by wealth segment 26
What do UK investors think about the likeliness that digital channels will replace in-person advice? 27
UK investors willingness to pay for robo vs. human financial advice 29
Technical features UK investors think robo-advisors should have 30
UK investors satisfaction levels with regard to their wealth managers services 31
Awareness of the robo technology among the respondents (US vs. UK) 32
Willingness to pay for robo advisory services: UK vs. USA 33
What people think about robo-advisors benefits 35
What people think about robo-advisors shortcomings 36

INVESTORS ATTITUDES TOWARDS ROBO-ADVISORS 3


SUMMARY
The majority of affluent and high-net-worth
individuals recognize the potential of robo-advisors
and automated investment services to add value to
their wealth management services. This is a main
finding of MyPrivateBankings recent quantitative
panel survey, with insights from 600 affluent and
wealthy investors in the US and the UK. The report
analyzes in depth the views and opinions of
individual investors with regard to the robo-advisor
topic. Besides exploring investors attitudes
towards specific features of online investment
platforms, the survey tests brand awareness and
the target markets level of openness towards
innovation in this field. In addition to the
comprehensive analysis all results are detailed in
extensive data appendices.
HIGH-NET-WORTH INDIVIDUALS USE ONLINE
INVESTMENT TOOLS MORE THAN OTHER
INVESTORS
More than 70% of overall respondents think that
such tools can positively influence their wealth
managers advice and decision-making process and
that automated advice potentially speeds up
onboarding processes such as registration and
account opening, making these processes more
efficient and convenient. This underlines how the
young and the wealthy are especially showing a
great openness, awareness and knowledge about
robo advice.
Interestingly, the adoption of automated wealth
advice is happening faster in the high-net-worth
segment than mass affluent with current usage of
online wealth management tools at 43% and 17%,
respectively.
INVESTORS ATTITUDES TOWARDS ROBO-ADVISORS
Report Extract
The report also identifies the major concerns
investors have in respect to robo-advisors and how
the respondents rate the quality of human advice
compared to that of robos.
UK AND US INVESTORS ARE BOTH OPEN TO
ROBO-ADVICE, BUT DIFFER IN THEIR
SENSITIVITY TO PRICE
Overall, investors on both sides of the Atlantic
show strong similarities in their awareness and
openness towards automated / robo advice, which
are detailed in the report. Despite the trends both
countries have in common, some striking
differences were also observed. Among them, this
includes the finding that UK investors would pay
more for robo (and human-only) advice and in the
US, a much higher share of respondents state that
they dont think they will use robo advice tools in
the future. The report identifies the price point
investors would pay and also the various levels of
brand awareness current leading robo-advisors
have with investors in the US and UK.
WEALTH MANAGEMENT INDUSTRYS FUTURE
WILL BE IN AUTOMATED ADVISORY
SERVICES
The report provides clear, empirical evidence on
why automated advice and robo services are a
significant part of every wealth managers future. It
shows how automation can enhance client
satisfaction throughout the different stages of the
advisory process and which channels investors like
to use to contact their wealth managers. The
report also identifies the most important value-
added services investors would like to see in a
robo-advisor tool and to which target segments
automated services appeal most.
4
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2.0 METHODOLOGY 2.3 DEMOGRAPHICS

The following table shows the distribution for the
most important variables by market.
2.1 REPORT OBJECTIVE
This report aims to reveal affluent and high-net- (Details in full report)
worth investors views and opinions with regard to
the robo-advisor topic. Besides identifying Traits Variable USA UK
investors attitudes towards specific features of
18-29 13% 23%
online investment platforms, the survey tests
brand awareness and the target markets level of 30-39 31% 27%
openness towards innovation in this field.
Additionally, we evaluate the digital Age group 40-49 27% 29%
communication behavior of clients including their 50-59 20% 16%
preference for different channels and online
features, in order to track developments since our 60+ 9% 5%
Global Survey of Mobile Disruption in Wealth
Male 43% 58%
Management 2014. Gender
Female 57% 42%
2.2 SURVEY SAMPLE
This report is based on a quantitative panel survey $100k- 91% 81%
$200k
launched in March 2016. The survey consists of 19
questions targeting mass affluent, affluent and Amount of
$200k- 8% 14%
investable
high-net-worth individuals in the UK and the US. $500k
assets
We selected these two countries as they are
More than 0.7% 4.3%
todays hotspots for FinTech startups and robo-
$500k
advisor tools.
(Note: n=600, some totals in the table are
The 600 participants in our survey were randomly shown as rounded values. )
selected based on the following criteria:

( more in full report)

INVESTORS ATTITUDES TOWARDS ROBO-ADVISORS 5

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2.4 AMOUNT OF INVESTABLE 2.6 DATA ANALYSIS

ASSETS CURRENCY
CONVERSION
In order to determine the segments for the
amount of investable assets, MyPrivateBanking
Research classified the ranges accordingly when
converting the segments into other currencies.
However, as currencies fluctuate over time, future
translation back to USD may cause values to differ.
Mass Affluent HNWI
affluent
After the field phase, the data was analyzed with
regard to basic statistical measures such as
frequency distributions. In addition to the overall
statistics, the sample was segmented by country,
age group and the amount of investable assets in
order to determine any significant differences and
demographical trends.
The full survey results are available in the data
appendix.

US Up to $500k - $1 More than

$500k million $1 million

UK Up to 300k - More than

300k 600k 600k

Throughout the report, the ranges are quoted in

USD for consistency.

2.5 SURVEY QUESTIONS

This report aims to analyze the attitudes of
affluent/wealthy individuals towards the use of
automated advice/guidance platforms, such as
those launched in the past 10 years, often by new
entrants characterized as FinTech players.

( more in full report)

Our questions to investors cover the following

areas:

( more in full report)

The full questionnaire is available on page 11 of

this extract.

INVESTORS ATTITUDES TOWARDS ROBO-ADVISORS 6

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3.0 INTRODUCTION

( more in full report pages 10 to 15)

4.0 MAIN FINDINGS

( more in full report pages 16 to 34)

5.0 INVESTORS VIEWS ON

ONLINE INVESTMENT
TOOLS: KEY TAKE-AWAYS

( more in full report pages 35 to 38)

APPENDIX 1: PROVIDERS OF ROBO-

ADVISORS
The market overview charts in chapter 3 are based
on the following list of global providers of robo-
advisors or hybrid solutions for financial advice,
which does not claim completeness. Some
companies included do not yet offer their robo
advice product but are planning do so in the next
months (listed with those launched in 2016).

( more in full report pages 39 to 48)

INVESTORS ATTITUDES TOWARDS ROBO-ADVISORS 7

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APPENDIX 2: DATASET U.S. (Powerpoint):

U.S. SURVEY
What do affluent and HNW investors
think about robo-advisors?

INVESTORS ATTITUDES TOWARDS ROBO-ADVISORS 8

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APPENDIX 3: DATASET UK (Powerpoint):

INVESTORS ATTITUDES TOWARDS ROBO-ADVISORS 9

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APPEDNIX 4: FULL DATASET (Powerpoint):

INVESTORS ATTITUDES TOWARDS ROBO-ADVISORS 10

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APPENIX 5: FULL SURVEY DATASET FOR 600 RESPONDENTS

()

INVESTORS ATTITUDES TOWARDS ROBO-ADVISORS 11

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SURVEY QUESTIONNAIRE

INTRO:
There is a growing market of online tools that help users to develop investment strategies and monitor the
performance of their assets a task traditionally performed by a financial advisor. In our study that will be
based on this questionnaire we would like to test the readiness of affluent and high-net-worth people to
using such online investment tools (also known as robo-advisors).

1.) Which of the following statements matches your investment type best?
I leave all investment decisions to my advisor
I consult my advisor before I make investment decisions but I take them myself
I take all decisions myself without consulting an advisor or an online investment platform
I take investment decisions myself but I am consulting an online investment platform
I delegate all my investment decisions to an online investment platform (robo-advisor)

2.) How do you usually interact with your financial advisor/financial institution?
In person
Via telephone
Via e-mail
Via text or video chat
On social networks
Via mobile apps offered by my financial institution/financial advisor
Other

3.) How much experience do you have in investing in the following?

Stocks
Bonds
Cash
Real estate
Savings account
Life insurance
ETFs
Mutual funds (US) | Unit trusts / OIECs (UK)

4.) Have you heard about/are you familiar with the concepts of robo-advisors, online investment
platforms or automated investment services?
I never came across these concepts or terms
Ive heard/read about them
I know quite a lot about these concepts
I know them in detail

5.) Are you already using an online investment platform that supports you in your investment decisions?
yes (Q6)
no, and I dont think I will in the future (Q7)
no, but I could imagine using an online investment tool in the future (Q6)

INVESTORS ATTITUDES TOWARDS ROBO-ADVISORS 12

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6.) What share of your investable assets would you consider managing/are you managing with an online
investment tool? Jump to Q8
Less than 10 %
Between 10% and 25%
Between 25% and 50%
Between 50% and 75%
Between 75 and 100%

7.) Would you be more likely to use such an online platform if it was recommended by a trusted online
service provider you already use (e.g. car/home/life insurer, sports club,)?
scale: very unlikely unlikely neutral likely very likely

8.) How much time would you expect to spend on completing a questionnaire about yourself during
registration process?
Up to 5 minutes
Between 5 and 10 minutes
Between 10 and 20 minutes
Between 20 and 30 minutes
More than 30 minutes

9.) What topics should such a questionnaire cover in your opinion?

Age
Family
Income
Planned retirement age
Investable assets
Attitude to risk
Financial knowledge
Personal investment preferences (e.g. social impact or ethics)
I dont know
Other:

10.) Do you agree or disagree with the following: With regard to client-advisor collaboration, online
investment tools
can help financial advisors to make better decisions/to improve the quality of their advice
can make registration and/or account opening processes faster and more efficient
can improve the client-advisor relationship through convenient contact options like text or video
chat
can help to make the advisory process more transparent and objective

11.) Do you agree or disagree with the following statements on the downsides of online investment tools?
These tools are too expensive
These tools are not transparent enough
My financial advisor knows me better than an online investment tool could ever do
I dont believe a software platform can give advice of equal quality to a human advisors
I dont think online-based investment tools are trustworthy
Advisors will probably rely too much on these tools and will stop to think and research on their own

INVESTORS ATTITUDES TOWARDS ROBO-ADVISORS 13

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12.) Which of the following companies do you connect with tools that support investors through online
investment tools?

US Survey UK Survey
Betterment Money on Toast
FutureAdvisor Nutmeg
Jemstep Moneyfarm
Wealthfront Zen Assets
Charles Schwab Intelligent Portfolios Wealth Horizon
Vanguard Personal Advisor Services Other, please specify
Wisebanyan
SigFig
Personal Capital
LearnVest
Other, please specify

13.) How satisfied are you with the following services of your existing wealth manager/financial advisor?
Retirement planning/Financial planning
Asset selection
Monitoring the investors assets
Automatic adjustments to the investors assets (re-balancing of portfolio)
Trading
Personalized investment proposals that match unique preferences, e.g. in terms of ethics or social
impact (thematic investing)
Reporting
Access to research reports
Legal advice in financial matters
Investment account aggregation
Tax optimization

14.) For which of the following investment tasks would you consider to get support from an online advisory
platform?
Retirement planning/Financial planning
Asset selection
Monitoring the investors assets
Automatic adjustments to the investors assets (re-balancing of portfolio)
Trading
Personalized investment proposals that match unique preferences, e.g. in terms of ethics or social
impact (thematic investing)
Reporting
Access to research reports
Legal advice in financial matters
Investment account aggregation
Tax optimization
Others (please enter)
I dont know

INVESTORS ATTITUDES TOWARDS ROBO-ADVISORS 14

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15.) What technical features do you think an online investment tool should offer?
A corresponding mobile app
A mobile optimized website
Highest security and encryption standards
Chat function for live support
Video chat
Call center with live support
Quick and simple registration process
Other (please specify)
I dont know

16.) Do you think that digital tools/features, such as apps, social media and chat are likely to replace in-
person or telephone advice to a large extent?
scale: very unlikely, unlikely, not so likely, likely, very likely

17.) Suppose you decided to use an automated online advisory tool to manage your investments: how
much would you be prepared to pay in fees as a percentage of your managed assets?
Less than 0.1%
Between 0.1% and 0.2%
Between 0.2% and 0.3%
Between 0.3% and 0.5%
Between 0.5% and 0.75%
Between 0.75% and 1.0%
Between 1.0% and 1.25%
Between 1.25% and 1.5%
More than 1.5%
I dont know

18.) How much are you prepared to pay for a regular (human) financial advisor as a percentage of your
managed assets?
Less than 0.1%
Between 0.1% and 0.2%
Between 0.2% and 0.3%
Between 0.3% and 0.5%
Between 0.5% and 0.75%
Between 0.75% and 1.0%
Between 1.0% and 1.25%
Between 1.25% and 1.5%
More than 1.5%
I dont know

INVESTORS ATTITUDES TOWARDS ROBO-ADVISORS 15

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19.) What is the approximate value of your investable assets?

US UK
Up to $ 200,000 Up to 125,000
$ 200,000 - $ 500,000 125,000 - 300,000
$ 500,000 - $ 1 million 300,000 - 600,000
$ 1 million - $ 5 million 600,000 - 3 million
More than $ 5 million More than 3 million

INVESTORS ATTITUDES TOWARDS ROBO-ADVISORS 16

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AUTHORS

Carmela Melone, Analyst, specializes in research in the fields of social media for
wealth management and mobile apps for financial advisors. Her specific areas of
interest are in software benchmarking, channel strategy and online security. Prior
to this, she worked at an exchange platform for intellectual property rights,
responsible for the digital media marketing strategy. Carmela has a Bachelors
degree in International Economics and European Studies from the University of
Tbingen (Germany).

Emma Haffenden, Senior Analyst, has over 10 years of experience in wealth

management and technology, mostly delivering analysis, business and technology
strategy consulting and research services to C level Executives of the leading global
financial institutions. In her previous roles, she led the Wealth & Private Banking
practice at Expand Research, a subsidiary of BCG, and was a Senior Consultant and
member of the Wealth Leadership team at Capco in London. Emma has a degree in
IT and Criminology, and a Masters in Database Systems from the University of
Westminster.

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INVESTORS ATTITUDES TOWARDS ROBO-ADVISORS 17

DISCLAIMER

IMPORTANT NOTICE AND DISCLAIMERS:

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INVESTORS ATTITUDES TOWARDS ROBO-ADVISORS 18