40% of Americans are comfortable seeking financial advice from AI
As technology continues to change the investment landscape, a new Merrill Edge report has found that nearly 40% of mass affluent Americans are comfortable consulting artificial intelligence for financial advice.
But that’s not all.
“Americans are more likely to trust AI with their finances than trust it to drive a car (28%), post to social media (28%) or select a wardrobe (26%),” the report, which was released last week, says.
While Gen Zers (those age 22 and younger) are the highest adopters of emerging technologies, the report shows that mass affluent investors of all ages are willing to have digital tools at their disposal, with one in five preferring digital advice over in-person guidance.
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That said, investors still value professional expertise over friends and families. Merrill Edge reports that “more investors are turning to professionals like financial advisors (81%) for counsel than their wealthiest friends (70%), older generations (69%), parents (66%) and friends (57%).”
“There has been a rising adoption of digital advice among our clients,” says David Poole, head of Merrill Edge Advisory, client services and digital capabilities. “We have a spectrum of tools to support different types of engagement. But we are seeing an increase in digital-only engagement across all demographics.”
But don’t expect robo advisors to fully replace their human counterparts anytime soon. Poole says the hybrid approach is still the way to go. “We have clients who are comfortable with human advisors. We also have clients who are comfortable with digital-only advice. The clients are always in the driver seat, and that allows them to decide what works out best for them.”
With artificial intelligence making steady inroads in finance, the challenge lies in using these emerging technologies to not just give the firms a competitive edge, but also employ big data to better serve clients with a variety of financial planning tools that could augment decision-making.
“You are only as good as the data you have,” says Denise Valentine, a senior analyst at research firm Aite Group. “If your data isn’t good, your results are going to be bad. This is why human advisors are absolutely necessary. Having a person to talk to when you are concerned about your financial future is pretty relevant.”
The survey, which was conducted by Convergys in April 2018, polled 1,000 mass affluent respondents across the U.S.