Robo-Adviser vs. Human Adviser

We know that most retirement plan participants need help investing. To get that help, they may turn to any of three options: their plan’s adviser, an automated service through a provider or a private adviser.

Forty percent of those who responded to the 2020 PLANSPONSOR Participant Survey, fielded September 10 through 16, use either a human or a “robo”-adviser for assistance with their defined contribution (DC) employer retirement plan assets.

Thirty percent of respondents with human advisers and 10% with robo-advisers made no changes to their retirement plans in the last 12 months. Fewer participants with a human adviser likely made changes to their plan because their ages were skewed closer to retirement age. Thirty percent of people with a human adviser were 50 or older, while only 15% with a robo-adviser were 50 or older.

Respondents who use a human adviser vs. a robo-adviser expect to retire at a younger age—i.e., 42% vs. 33% plan to retire by 65. They also have higher total retirement savings—48% vs. 35% have saved over $250,000.

Human advisers may find room to grow if they can cater to current market segments that appear to be doing well with robo-advisers. Sixty-one percent of respondents who rely on robo-advisers were ages 23 through 39, vs. 35% who use a human adviser.

Also, a larger proportion of respondents who use robo-advisers are minorities—e.g., 18% Hispanic and 13% Black—compared with 10% and 6%, respectively, who have human advisers. This suggests advisers may have success with Millennial or early Generation Z savers and minority groups. Further, 23% of respondents do not currently work with an adviser but say they plan to in the future.

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Expected Retirement Age

Retirement Plan Actions Taken in the Last 12 Months

Retirement Savings Across All Designated Accounts