Just over three-quarters of Australia’s wealth managers have lowered costs to complete with robo-advisers, according to data and analytics firm GlobalData.
GlobalData’s ‘2020 Global Wealth Managers Survey’ showed Australian high net worth (HNW) investors used an average of four different providers, as the uptake of automated investment services increased.
The growing adoption of robo-advice with HNWs had a significant impact over human wealth managers who were losing market share.
Heike van den Hoevel, GlobalData senior wealth management analyst, said the data showed that eight out of 10 wealth managers agreed that HNW clients were increasingly fee-sensitive due to the rise in robo-adviser services.
“Accordingly, 76% of wealth managers in Australia, compared to 61% globally, indicated that they have already lowered or plan to lower their fees to compete with automated investment services,” van den Hoevel said.
Although price was a key factor, the analysis found that the drive to robo-advice was also due to a loss in trust in traditional advisers and that re-building trust should be a major concern.
“On the flipside, a desire to talk to a human adviser and the often still-limited investment range of robo services represent the two main deterrents,” van den Hoevel said.
“As long as an impersonal algorithm enjoys greater levels of trust, any fee reductions are unlikely to entice investors.
“In addition, highlighting a positive track record and the benefits of a wide range of investments – especially as ongoing market volatility calls for greater levels of diversification – will be critical in retaining clients in the current crisis-plagued environment.”