New research on 500 ‘affluent millennials’ suggests that a technology ‘tipping point’ has been reached for millennials when it comes to managing money.
Overall, 53% now prefer to take advice from a robo-adviser than a traditional financial adviser, according to the research for law firm Michelmores LLP.
The research into affluent millennials with more than £25,000 worth of investable assets found that the change was more pronounced among younger millennials – with 60% of those born in the 1990s showing a preference for robo-advisers, compared to only 49% of those born in the 1980s.
Wealth is also a factor.
The more wealthy the millennial, the more likely they are to lean towards robo-advice – 61% of millennials with £75,000 or more in investable assets agree that they would prefer to take ‘advice’ from a robo-adviser compared to only 50% of those with £25,000 - £74,999 worth of investable assets.
Despite the growing preference for robo-advisers more than four in five (85%) affluent millennials say that they trust financial advisers “generally” or to “some extent.”
While the report is good news for robo-advice firms, the robo-advice sector has struggled to make money with a number of robo-firms closing their doors recently including Moola.
Richard Cobb, private wealth partner at Michelmores LLP, said: “The number of millennials with money to invest and assets to protect is growing. Our research among millennials backs up a pattern we see emerging through clients; that millennials are fast embracing advancing technologies.
“While their trust in financial advisers remains strong, this demographic is likely to embrace advice from varying sources. Affluent millennials are increasingly comfortable using technology to manage their money, believing that it gives them a greater degree of control than using other investment management methods while enjoying the agile investment benefits technology offers.
“This is far from the end of traditional financial advisers though as we are increasingly seeing new clients looking for hybrid support, with face-to-face professional advice supported by real-time reporting technology to help achieve their investment goals. The relationships financial advisers have with their clients facilitate an in-depth understanding of their needs and challenges – robo-advice simply isn’t there yet.
“As affluent millennials become wealthier and more directly engaged with their money, the financial and legal sectors have an opportunity to evolve their offerings to differentiate themselves from online platforms while communicating their value-add services. This will allow clients to benefit from the efficiencies that new technologies can offer, as well as receive more complex and ‘holistic’ professional advice in person.”
• Savanta ComRes (previously ComRes) surveyed 501 ‘affluent millennials’ (defined as those born between 1981 – 1996 with £25,000+ worth of investable assets) online in June 2019. Data was unweighted.