Financial Advisors Will Not Be Replaced By Technology, Investors Say

Robots Already Here


By Karen DeMasters/ FA-Mag.com

The future of financial advisors is safe despite the inroads of technology, according to a report from Wells Fargo released (recently).

The results of the 2019 Wells Fargo/Gallup Investor and Retirement Optimism Index survey showed that most investors (84 percent) feel financial advisors will always be needed and will not be replaced by automated investing technology.

“This report should be a cause for optimism for financial professionals,” said Wayne Badorf, head of intermediary distribution at Wells Fargo Asset Management. “People—even young people—want that human touch when planning their financial futures, but they want advisors who use technology. It is not an either-or scenario. Thirty-nine percent of people who use an advisor want to meet with him or her as much as three times a year.

“The study also showed there is a large underserved population out there that wants a financial advisor,” he added.

Twenty-two percent of the 1,029 investors included in the survey said they would like to work with an advisor but are not doing so now. An investor for the purposes of the study was defined as an adult in a household with stocks, bonds or mutual funds of $10,000 or more, either in an investment account or in a self-directed IRA or 401(k) retirement account.

“A lot of people are asking if the younger generations will want to work with a financial professional. The survey confirms that technology is not replacing the need for advisors,” Badorf said. “Advisors need to pursue the next generation of clients … including their clients’ adult children.

“Advisors also should know that 46 percent of their clients or potential clients are looking for second opinions,” he added.

Seventy-three percent of the survey respondents said the financial benefits that come from professional advice are worth the cost. Only 24 percent said they currently use automated investing technology for their own investing without the assistance of an advisor.

When ranking important services provided by financial advisors, investors said advisors are valued for keeping them motivated and on track with their financial goals, for understanding their personal lives and family dynamics, and for helping them clarify their broader life values and goals.

The reasons given for not engaging an advisor were that they are too expensive, that investors would rather purchase index funds or automated investments directly or that the investors thought they could invest better on their own.

Investors are optimistic about the future. Fifty-one percent said they are either somewhat optimistic or very optimistic that they will achieve their investment targets over the next 12 months, and 62 percent said they are somewhat optimistic or very optimistic about achieving their goals in the next five years. Seventy-five percent said they are highly or somewhat confident they will have enough money to maintain their lifestyle in retirement, an increase of 6 percentage points from a similar survey last August.

To achieve their investing targets, 61 percent of investors said their goal is to maximize growth, while only 39 percent said their first goal is to protect themselves from major losses.