According to the CFA Institute’s 2018 survey of investor trust, Australian retail investors are more likely to trust human finance planners over electronic advice by an overwhelming majority.
More than 80 per cent of Australian retail investors said they were less likely to trust the recommendations made by an electronic adviser than a human adviser.
Only three per cent of those surveyed thought digital financial advice was more trustworthy than humans, while about 16 per cent thought human and robot trustworthiness was at the same level.
The CFA surveyed 3,127 retail investors who had US$100,000 or more in investable assets in 12 markets. Roughly seven per cent of retail investors were Australian. One of the study’s main aims was to look for links between technology and trust.
The report said that while young investors have the most trust in technology, all age groups are increasing their use of technology over time. It was found that technology wasn’t able to create trust, but increase trust by helping financial professionals provide services and information to their clients.
Australia is one of five markets to show a preference for humans over robots. Other countries to prefer humans include Canada, Germany, United States, and the United Kingdom, though Australians trust in electronic advice is expected to rise.
Electronic advice is relatively undeveloped and new to the market, so opinions will shift as awareness grows among investors. Buying online is now the norm, and this will only increase.
Major financial institutions have quickly realised the need to get with the times, so are increasing investments in technological improvements for their customers.
Blockchain technology has been approved by a majority of the institutional investors surveyed, with 63 per cent of those surveyed saying blockchain has the potential to increase trust in institutional investment. The report said that trust in the system can be strengthened by reducing reliance on counterparty organisations.
Over half of those surveyed believe that in three years, having the right technology tools to execute strategies will be more important than having a person to help them.