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December 11, 2017updated 12 Dec 2017 5:07pm

Rise of the robo-advisors: Millennials investing on the go

Nearly half (44%) of millennials managing money digitally once a week feel financially in control.

By CBR Staff Writer

While robo-advisors and AI assistants may fall into the Uncanny Valley for some investors, new research has shown that UK millennials are more likely to have positive feelings towards machine-generated advice than anyone else.

With the Pound taking a tumble since Brexit, gold prices fluctuating significantly, and cryptocurrencies creating new uncertainties of late, millennials (those aged 25-34) are increasingly turning to their smartphones for financial tools. A new survey has found two in five Brits in their late twenties or early thirties are aware of “robo-advisors” which give computer-generated investment suggestions.

Having lived through the Credit Crunch and racked up record-level student debt, this generation of investors place more of their trust in tech than their parents. One in four millennials who are aware of robo-advisors said they are very likely to use one in the future – whereas 55-64 and 65-74 year olds felt they were unlikely ever to use one at all.robo-advisors

Three out of five millennials in the UK manage their everyday savings at least once per week online, including use of a mobile or tablet. A quarter of those who monitor or manage their investments digitally feel encouraged to keep investing, while one in five (22%) are more interested in making investments online in the future.

With contactless payment systems like Monzo and Apple Pay on the rise, young professionals are gaining confidence in money management through use of financial apps on smartphones and tablets; 44% of millennials managing their investments online at least once a week felt like they were more in control of their money, compared to three in 10 who did so at least once a month.

Additionally, half of those reported a sense of reassurance about their money when managing their investments online at least once a week, compared to 36% of millennials who did so at least once a month.

Just 2% of 25-34 year olds told researchers digitally monitoring or managing investments believe technology has not made a difference.

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UBS and Natwest, RBS rolled out robo-advisors in October and November last year respectively. In a bid to attract younger investors, UBS’ automated advice service would recommend a tailor-made investment portfolio to customers with a stake as low as £15,000.

However, more than half of millennials would not consider moving existing savings out of cash, and 30% cite a lack of understanding of investments and concern about losing money (28%) as the main barriers.

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Other research has found more broad support of robo-advice, with 68% of all UK consumers happy to consult such a service on traditionally complex banking decisions, according to Accenture. One in five of these respondents felt reassured by the “impartiality” of a machine advisor.

Technology such as AI chat programmes are “at the heart of how millennials communicate, consume information, and manage their day-to-day living”, according to Nick Hutton, Head of the BlackRock UK Retail Sales Team.

“The recent increase in the number of financial apps and tools is encouraging those who have been reluctant in the past to invest for the first time, no matter how small the amount. The ability to invest a few pounds at a time can have a big impact over the long term,” said Mr Hutton.

Data from a Blackrock UK Investor Pulse Survey of 4000 respondents, 750 of whom were classed as millennials: between 25 and 34 years old.

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