A study has suggested the raft of robo wealth firms coming to the European market will struggle to gather assets.
According to the fifth ING International Survey Mobile Banking 2017 - New Technologies report, 91% of people across Europe would not let a computer programme make and act on financial decisions on their behalf.
A total of 15,000 people were surveyed across 15 countries to deliver the findings.
It found that in the UK (see table below) 42% of those questioned had no desire for automated financial activities, with just 28% saying they would like a computer programme to give them advice but not make decisions.
|Country||I don’t want automated financial activities at all||I’d like a computer programme to give me advice, but not make decisions||Only if the decisions need final approval from me||I would like a computer to conduct financial activities without approval||I’m not really sure right now|
Allowing a computer program to make decisions is not out of the question for some people, with a fifth (21%) of UK investors saying this would be an option if they got final approval. A total of 6% were unsure what to make of robo advisers.
The findings will not be music to the ears of the UK robo market, which is notoriously secretive when it comes to providing information on assets under management.
While the overheads at these firms tend to be lower than traditional wealth managers, it provides an insight into the battle they face to remain relevant to a sceptical client base.
Competition in the sector has got fierce over the last 12 months, with firms identifying the UK to be a fertile hunting ground.
Just last week Wealth Manager revealed Canadian giant Wealthsimple had received authorisation from the Financial Conduct Authority to launch into the UK.
Meanwhile Gemma Godfrey’s new online investment firm Moola has received financial backing of a number of City figures, including Lansdowne Partners’ chairman Stuart Roden.
While the UK clearly remains unconvinced by robos, people here are more likely to turn to them than in the likes of Germany and France, where 47% and 51% respectively see no need for automated financial activities.
In the US, the world's most sophisticated digital wealth market, 34% of those surveyed expressed no desire for automated advice.
Clinging to control
In explaining why the take up is not higher, the study suggests people are reluctant to give up control - or perceived control - over decisions.
This is the case even if outsourcing the decision will lead to a better outcome.
ING noted that especially in Europe people are wary of allowing computers to make decisions on their behalf. They tend to become less comfortable when there are large sums of money at stake.
The report found Europeans are not total technophobes though. For instance they feel relatively comfortable letting a computer automatically send a birthday card to a friend (38%), transferring money from savings (34%) or ordering milk from the grocery store (32%). They tend to be far less relaxed when technology is applied to buying health insurance (21%), or putting money into investments (13%).
'Letting algorithms make money decisions for us has the potential to be really advantageous and free up some headspace – yet we found that many people are reluctant to give up control of these decisions,' ING behavioural scientist Nathalie Spencer commented.
'As newer technologies like robo-advisers become more prevalent, we may see people start to embrace the personalisation and convenience it offers, but the desire to control decisions will most likely mean that most will always want final approval.
She added: 'Given that often computer programs can outperform humans, it is important that as an industry we learn more about where confidence in this type of tech breaks down. This will be key in trying to help improve people’s financial positions.'