Market Strategies International


Cogent Reports: Use of and Interest In Robo-Advisors Soars Among Investors

Early Adoption driven by Millennials, But Gen X Wants In on the Action

Nearly one-third (30%) of affluent Americans are already using some type of automated investment advice service—also known as a robo-advisor—to manage a portion of their assets, and an additional 22% are thinking about placing money with a robo-advisor in the near future. However, despite increasing comfort with using these products, investors seem uncertain about where to turn for a solution.

Among those expressing interest, only half (51%) can name a would-be provider, leaving the other half (49%), about 10% of all affluent Americans, open to learning about automated investment advice solutions from well-known players and upstarts alike. These and other findings are included in the 2015 Investor Brandscape™ report released last week by Cogent Reports™, the syndicated research division of Market Strategies International.

Cogent Reports found that 17% of investors are using robo-advisor services from an established provider—namely, Fidelity, Vanguard, and Charles Schwab—while 10% are using one of nearly two dozen emerging providers, and an additional seven percent are unable to name their provider.

The research reveals that three-quarters (76%) of robo-advisor users have less than $500,000 in total investable assets; however, money invested with a robo-advisor typically represents a majority of users’ assets—60% on average. While Millennials (26%) and Gen Xers (31%) make up the majority of current robo-advisor users, four in ten users are either 1st Wave (18%) or 2nd Wave (19%) Boomers.

“To say that robo-advisors have gained traction in the marketplace would be a dramatic understatement at this point, particularly where younger investors are concerned,” said Linda York, vice president at Market Strategies. “Furthermore, with adoption anticipated to increase rapidly, industry leaders are scrambling to figure out how to get into the game. Since sitting on the sidelines is not an option, many companies are considering whether to build it or buy it.”

According to Cogent Reports, the vast majority of near-term adoption of robo-advisors will come not from Millennials, but Gen Xers, the oldest of whom are turning 50 this year. Not only is this the generation most interested in robo-advisors, it is also the group most likely to name an emerging provider for consideration.

“Our research shows the factors that most distinguish those likely to embrace robo-advisors from those who will not are a much higher level of concern about the ability to save for and adequately fund retirement, and a strong desire for enhanced investment performance,” continued York. “These priorities coupled with a notably higher risk-profile suggest that many pre-retirees see automated investment service solutions as a good way of getting to their retirement goals. Needless to say, this could have huge implications for the IRA rollover marketplace as well as threaten the dominance of traditional target-date funds inside of DC plans.”

The Top 10 Robo-Advisor Providers Generation X Investors Are Likely to Consider

  1. Fidelity Investments
  2. Vanguard
  3. Charles Schwab
  4. Motley Fool Wealth Management
  5. Betterment
  6. Wealthfront
  7. AssetBuilder
  8. Hedgeable
  9. Personal Capital
  10. FutureAdvisor
Source: Market Strategies International. Cogent Reports™. Investor Brandscape: October 2015.

About Investor Brandscape

Cogent Reports interviewed 3,889 affluent investors who were recruited from the Research Now, SSI and Usamp online panels. Respondents were required to have at least $100,000 in investable assets (excluding real estate). Due to their opt-in nature, the online panels (like most others) do not yield a random probability sample of the target population. Thus, target quotas and weighting are set around key demographic variables using the most recent data available from the Survey of Consumer Finances (SCF) conducted by the Federal Reserve Board. As such, it is not possible to compute a margin of error or to statistically quantify the accuracy of projections. Market Strategies will supply the exact wording of any survey question upon request.

To learn more about how the use of robo-advisors and advice services and the growing wealth of Millennials is effecting the affluent investor marketplace, watch our webinar:

Watch The New Generation of Investors and Advice Solutions

Anne Fallon
Director, Syndicated Marketing


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