“The industry has focused on how digital services could potentially replace human advisors, but less attention has been paid to the possibility that digitally advised clients would consider switching to human advisors,” said Paulo Costa, Ph.D., a behavioral economist in Vanguard Investment Strategy Group, who led the study.
Seventy-six percent of the human-advised clients surveyed said they would seek out another human advisor, and 17% said they would search for a service that combines human and digital advisors. And 88% percent of the digital-only respondents expressed a willingness to switch to a human advisor in the future.
“People want human advisors, but they also see a role for technology in the delivery of services,” Costa said.
The study examined investor preferences regarding advice and the perceived trade-offs between the human and digital kind. It investigated whether technology was a threat to financial advisors by examining loyalty to both human and digital advisors and the likelihood of clients switching services.
The typical human-advised client is quite different from those who get their advice digitally, Costa explained.
“Clients with a human advisor indicated that they don’t have the time, willingness, or ability to manage their investments,” he said. “And as financial life gets more complex, investors seem to want more personalized attention that you get with a human advisor.”