Data & Research June 15, 2016

Millennial Advisers Far More Optimistic on Markets Than Their Counterparts

Nearly three-quarters think the market volatility will settle down by year’s end.
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Seventy-four percent of Millennial advisers think the current market volatility will settle down by the end of the year, compared with just 43% of all other advisers, according to a survey by Eaton Vance. While 56% of other advisers think volatility is the “new normal,” only 26% of Millennials think so.

Forty-percent of Millennial advisers believe volatility is part of the investment process, and 30% believe it presents an opportunity to generate income. In fact, 40% of Millennial advisers say the market volatility has helped them gain new clients.

Forty-one percent of Millennial advisers think the Federal Reserve is the biggest driver of market volatility, compared with 23% of advisers from other generations. On the other hand, 27% of non-Millennial advisers think stalled economic growth is the major driver of market volatility, compared with 11% of Millennial advisers.

Other big drivers of market volatility, Millennial advisers say, are turbulence in the Chinese economy (28%), instability in the European Union (12%), sluggish economic growth in the U.S. (11%), and geopolitical issues (8%). Nonetheless, 38% of Millennial advisers are more confident in the U.S. economy than they were 12 months ago.

As to how they are grappling with market volatility, 49% of Millennial advisers are turning to high-yield bonds, municipal bonds (42%), floating-rate bonds (40%), multi-sector bond funds (33%) and government bonds (23%).

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Projecting out three to five years, 50% of Millennial advisers think a professional managed strategy will be key, 34% expect to lean on bond mutual funds, 12% look to bond separately managed accounts, and 6% are planning on laddered bond portfolios.

Data & Research June 15, 2016

GfK: Consumers Are Still Not Ready for 'Robo'

New survey again confirms all-automated advisers can’t compete with humans.
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If a new survey by GfK is correct, financial service firms will have a long wait before most of their clients embrace an all-digital—aka robo—customer service approach. While the trend is in that direction—25- through 34-year-olds were the most open to receiving their investment advice via text or online chat—still just 15% said they would likely use a service that offered no human contact, and less than 5% of people 50-plus said they would.

“Financial firms are betting on an increasingly automated customer service approach to help them stay lean in an unforgiving consumer marketplace,” said Tom Neri, managing director of GfK’s financial services team in North America. “But even digitally native Millennials are only lukewarm to this vision when it comes to the difficult area of investments.”

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In fact, to receive financial advice from a person, nearly four in 10 (38%) said that they would be willing to pay more, and 45% said a lower fee would not induce them to forego live help.  

Respondents showed the most resistance to fully automating customer service for investments and mortgages. They appeared slightly more willing to accept an all-digital service plan for checking and savings accounts. Trust—a vital component of financial decisions—was low when it came to digital advice—only 10% of respondents said they would likely trust financial advice from a computer algorithm more than from a person; 50%, in fact, disagreed with that statement. Again, those most apt to trust robo advisers were the aged 25-to-34 group (17%) and the least, those 65 and up (6%). 

“FS companies need to be cautious in deploying robo-adviser technology, making sure to provide their high-value customers with the service they need,” Neri says. “A one-size-fits-all seems certain to alienate even young investors.”

Consumers’ doubts about automated investment services may stem from disappointing experiences with their financial firms’ current digital properties, GfK theorizes. Only 27% agreed that they can easily access whatever information they need on their financial services firm’s website.

The GfK survey was conducted among 1,000 members of the company’s nationally representative KnowledgePanel® from June 3 through 5. GfK is a marketing and consumer research firm.

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