Robo-Advisors – Friend or foe? Investors’ perception


Robo-advisors are at the crossing of different strong trends: lowered management fees, digital distribution and machine-enhanced decision making. Their ability to reduce the production costs through automation over the long term and to enable large economies of scale also allow for setting the minimum investment in robo-advised funds lower than for traditional investments. Thus robo-advisors present a seducing alternative investment solution for many people who wouldn’t be qualifying for tapping the high-end products available in traditional private banking or asset management. All these reasons would explain why recent studies1,2 would project robo-advised funds AUM to grow at a consistent rate of 33 to 37% annually over the next 3 years, thus bringing their amount to roughly 4 times what they used to be beginning of 2017.

ATKearney3 projects an even steeper growth for robo-advised funds, with a 68% annual growth rate to reach $ 2.2 trillion AUM by 2020. An important underlying factor in robo-advisors potential success relies in how investors and the general public perceive the robustness of this innovative model. Trust is indeed a major factor when it comes to handing over to a third party part or all the responsibility to achieve return on ones precious and well deserved savings.

Source: Initio based on Researcher Cerulli Associates1 and S&P Market Intelligence2

Source: Initio based on Researcher Cerulli Associates1
and S&P Market Intelligence2

General Perception: most retail consumers are not willing to let a machine make their money decisions

Of all the papers used to prepare this article, ING’s Mobile Banking – The next Generation survey has the widest scope and is the most representative of the global general public (15,000 surveyed people over 13 European countries plus the US and Canada). The principal teaching from this study is groundbreaking: 91% of this large sample would not let a computer make money decisions. It is not an understatement then to say there are still some trust issues to overcome when it comes to letting a machine decide where to invest ones savings.


It would be foolish though to stop right there and not dig a little further. With all innovations, there has always been a small proportion of early adopters and it takes time to progress from early adoption to massive consumption. Even if around a third of European or US consumers don’t want any automated financial services, more than a quarter of the overall sample would “like a computer program to give them advice but not make decisions” and another quarter would “allow a robo-advisor to make financial decisions if they retain the final approval”. This leaves only 3% among Europeans who would trust a robot and let it go through the whole process of investing blindfolded. This would then strongly argue either for financial advisory services not to propose a robo-advisor at all (but this would also, as we will see, be an erroneous conclusion) or if so favouring a hybrid model, where portfolio managers and financial advisers would use the robo-advisors to optimize the cost and time efficiency of their allocations decisions, over the pure niche players where the robot is part or fully autonomous in making allocation and rebalancing bets.

What the study also shows is that despite globalisation there are some strong disparities country by country. Even if the US and Europe tend to present the same general average profile, countries like Turkey, Romania and Poland are amongst the ones where there is the strongest appetite for such digital services, maybe because of a lack of access to traditional services coupled with a stronger and more optimistic desire for technological progress, whereas countries like France, Austria and Luxembourg are amongst the most conservative in terms of digital readiness for investment decisions. The gap is significant since only 21% of the Turkish survey takers would simply refuse any automated financial services when 52% of Luxembourgish respondents are completely reluctant.

A different picture when targeting a more knowledgeable customer base

Now that we have established the general population sentiment, it would be worth adding up some valuable input by targeting a more specialized subset of the general population. Gambit Financial Solutions’s survey, conducted by IFOP, used a sample of 301 persons, focusing on French property owners earning gross salaries above €80k. Even if we saw in the ING survey that French people weren’t amongst the most robo-advisors enthusiasts, the result of targeting a population more enclined to investing gives a whole different picture.


In terms of awareness, 42% of this panel heard about robo-advisors and 22% know precisely what they are about. Even if only 3% already invested in robo-advised funds, which is a start, 41% of those who haven’t yet declare being ready to use such financial service. This share is even higher among those who personally take care of their own investments (47%)  and for those who are already using the services of a financial advisor (45%).  Among the 59% ones simply refusing such robotized advice, and compared with the overwhelming 91% of the ING study, the split by generation is worth noticing with 69% of them being over 65 years old and only 49% in the 35 to 49 age range. Finally and in accordance with the ING Mobile Banking Survey, 3 out of 4 respondents consider robo-advisors to be complementary with their personal financial advisor given there is a strong reliance (80% satisfied) on their financial advisor to explain and clarify the results of their portfolios. Robo-advisors, according to this study, benefit from a very good perception among this “more advised” sample, with 4 survey participants out of 5 finding that robo-advisors are at the cutting-edge of innovation and technology and are time savers in their asset management activities. Despite these advantages, the trust issue is still expressed as only 44% would agree that robo-advisors are tools one can trust for their financial investments.

These more optimistic results show that there is no need for professionals to wait for implementing such digital services and liven their offer up with a robo-advisor. Communication and education are important though, in order to leverage the maximum satisfaction from customers as well as convincing them to use these additional tools. Beyond the hype, robo-advisors are both a way to attract additional funds and a way to consolidate the existing customer base, through a better and enhanced customer experience. Let’s not forget that these studies disregard an important and decisive factor, which is the level of fees that robo-advisors enable (under 1% management fees VS 1-3% for classic asset management). As suggested in ATKearnie’s study3, princing is the prevalent factor over investment expertise when selecting a provider to manage household investable assets. Besides, many traditional main players just launched or are about to launch their offers. Their commitment in this niche market will be a game changer and will help popularize this innovative solution. Even if robo-advisors will only reach out to pioneers and early-enthusiasts at first, it is worth spending some time and energy in starting developing what will tend to become an unavoidable edge over competition with more and more sophisticated algorithms. Moreover, tomorrow’s mainstream investor is today’s young Millenial with her or his well-known tech sensitivity in a reasonable way.

 Potential Challenges: some fears to overcome – a generational gap

Robo-advisors present the clear advantages of diversifying distribution channels as well as attracting a new part of the population with their relatively low minimum investment and quick digital onboarding. According to Cerulli Associates6, Millenials have the highest propensity for using digital financial services, with 54% of them being open to having their assets managed by online-only providers. Among the older generations, 39% of Gen-Xers and 29% of Baby Boomers are willing to use digital advising services. These figures, combined with the ING International Survey Mobile Banking7, where it appears that a third of the overall sample (14,692 people over 15 Western countries) simply refuse automated financial activities, show that there are still some trust issues to overcome. But given the size of the underserved people who would be willing to get financial advisory services while not being able to afford the high-end services, robo-advising, with its positioning and its cost efficiency, will be creating its own market and bringing some new customers to the overall funds industry over the coming years.


Robo-advisors are still in their early phase and the general public’s awareness for this innovation is still spreading. There is still a long way before general acceptance and some parts of the population will just never use such services. The move towards fully machine enhanced investment services is more of a long hauled over-generations transition than a sudden disruptive tilt towards immediate progress. Hopefully human contact and trust is still an appraised and valued asset and the hybrid model most banks and asset managers are implementing will tend to be the dominant model, although the market for fully robo-advised financial services already exists.

The latter, instead of mostly taking some market share from traditional investment services, will tend to be a new segment that will help complete the offer and help asset managers to attract a new public, either earlier in their life than they used to come over or even just people who would gladly be equipped with more advanced financial advisory services but weren’t able to afford them.

Hence financial advisors shouldn’t be afraid of robo-advisors and should see in them more of an ally that would bring more business to the table as well as help them to be more cost and time efficient, even helping them achieve higher quality standards in their day to day work. The time of the advisor with only a calculator, a pen and a piece of paper is long gone but robo-advisors represent part of the next step in progressively sliding to the future of financial advisory services. Security and privacy are also major concerns for using online services. It will also be interesting to see which neobank will manage to be the first to combine a robo-advisor with their payment services. At least there is one thing we can be sure of: the coming years won’t be boring at all!

In order to complete and improve our view on the topic, Initio is conducting its own survey. It’d be greatly appreciated if you could take 3-5 minutes to fill it in on Initio’s blog ( Thanks a lot.

Frederic Lorain 

About the Author


Frederic Lorain. Specialized in Banking and Financial Markets, Frederic’s 4 years’ experience had him build a good knowledge of the operational issues. He worked on several development projects providing increased automation, improved risk management and more effective control over operations. He passed all three levels of the CFA Program and may be awarded the charter upon completion of the required work experience. His experience as a business owner gave him confidence in implementing functional and operational solutions.


1 “Retail Direct Firms and Digital Advice Providers 2015: Addressing Millennials, the Mass Market, and Robo Advice.” Cerulli Associates

2 S&P Market Intelligence study quoted in Robo Advisors’ AUM Expected to Hit Nearly $145 Billion in 2017, September 5th, 2017

3 Hype vs. Reality: The Coming Waves of “Robo” Adoption, A.T.Kearney, June 2015,

4 ING International Survey, conducted by IPSOS in behalf of ING, Mobile Banking 2017 –Newer Technologies May 2017,

5 ROBO ADVISORS Comment sont-ils perçus par les investisseurs particuliers français ?, Gambit – IFOP, January 2018,