New York (HedgeCo.Net) While a great amount of attention is being paid to robo-advisors and it seems every major brokerage firm is launching their own version of one, the service isn’t catching on as well in North America and Europe as it is in other parts of the world.
The latest World Wealth Report from Capgemini and RBC Wealth Management broke down the use of robo-advisors by region and the survey clearly shows that robo-advisors are much more popular in the Asia-Pacific region (excluding Japan).
For the survey, respondents were asked one question with the question depending upon if it was a high net worth investor (HNWI) or wealth manager. Investors were asked “Would you ever consider having a portion of your wealth managed by an automated advisory service?” and the wealth managers were asked “In your view, would your HNW clients consider having a portion of their wealth managed by an automated advisory service?”
The full results are below, but the biggest takeaways from the survey are that investors see more value to robo-advisors than wealth managers do and secondly, the disparity between the perceived value is greater where HNWIs are more apt to use automated advisory services.
The Asia-Pacific region saw over 75% of investors respond that they would consider using an automated advisory service, yet less than 20% of wealth managers in the region think their clients would consider using a robo-advisor. Latin America saw similar results with 70.4% of investors answering that they would consider using a robo-advisor while only 14% of wealth managers think their clients would consider using one.
North American investors are the least likely to consider a robo-advisor with only 33.5% responding favorably while 45.8 % of European investors responded favorably. Japan was the most interesting with a little over half of investors saying they would consider using a robo-advisor while the wealth managers in Japan were the most accepting of the technology with 32% responding favorably.
Regardless of how you feel as an investor or an advisor, robo-advisors are here to stay. Some full-service advisors view robo-advisors as a threat, but that doesn’t have to be the case. If the technology is there and can add value to your clients portfolio, why not use it?
While HedgeCoVest isn’t a robo-advisor in the traditional sense, there are certain aspects that are similar. Yes the platform and the technology run the portfolios and make the trades, but the decisions are made fund managers with years of experience. In a lighthearted conversation here in the office one day, HedgeCoVest CEO Evan Rapoport called our models Cyborgs —part human and part robot. Even if it was said in jest, that is a pretty accurate description really.
Another big difference between HedgeCoVest and the traditional robo-advisors is that robo-advisors are designed to invest for an individual with their lifetime goal in mind. The models on the HedgeCoVest platform are trying to take advantage of market conditions with a shorter time horizon, whether it is for the next few months or the next few years. The models are trying to reduce risk and provide consistent returns.
As an investor, aren’t you looking for consistent returns with less risk? As an advisor, aren’t you looking for ways to reduce the risks in your clients’ portfolios while achieving consistent returns? HedgeCoVest can help both investors and advisors and we have managers with years of experience calling the shots.
Rick Pendergraft
Research Analyst
HedgeCoVest
