Investors are more likely to use robo-advisor platforms to invest with the goal of buying a house than any other large purchase, according to Investopedia’s 2023 Robo-Advisor Consumer Survey. When asked to choose from a list of top investment goals that they are most likely to use their robo-advisor to plan for, the majority of respondents chose using these digital wealth management platforms to invest for making large purchases like houses, vehicles, and travel. Surprisingly, investing for retirement and building long-term wealth ranked toward the bottom of the list.
Beyond what investors are using robo-advisors for, respondents also said that recent market conditions have not changed the amount of money they are investing. They also said they favor online publications to help them learn about investing topics like planning tools and developing custom portfolios.
Investopedia surveyed 205 robo-advisor users between Aug. 30 and Sept. 15, 2023, to better understand how they use these digital wealth management platforms, and how they approach learning about investing.
Key Takeaways
- Investors are most likely to use a robo-advisor platform to buy a house, purchase a car, or pay for travel, according to Investopedia's 2023 survey.
- While most respondents said they were worried about market conditions, the majority said they were making no changes to their investment plan.
- Robo-advisor users said they are most interested in custom portfolios and planning tools.
The Majority of Investors Are Using Robo-Advisors To Invest for Large Purchases
Due to a powerful combination of supply constraints and the inability of household incomes to keep up with a sharp rise in mortgage rates, 2023 has gained the incredible distinction of being the year when housing became less affordable than it was prior to the great financial crisis. Luckily, advancements in top financial technology (Fintech) companies have given investors the ability to invest with the goal of being able to buy a home.
Our survey revealed that the majority of respondents are most likely to use these digital wealth management platforms to invest for large purchases, rather than for retirement. In fact, when asked to choose up to three of the most popular investment goals, 50% of investors said they would most likely use robo-advisors to invest to buy a home, 42% said to invest to buy a vehicle, 29% selected investing for travel, and 20% said they'd use their robo-advisor to invest to pay for college. Surprisingly, our survey found that just 16% said they use these digital wealth management platforms to build wealth for retirement, and 9% of respondents said they'd use a robo-advisor to build long-term wealth.
Respondents were able to select more than one, up to three.
More Investors in Their 20s Are Using Robo-Advisors Than Investors in Their 50s
Of the robo-advisor users we surveyed, about 86% are in their 20s, 30s, and 40s, compared to 14% of respondents who said they are in their 50s, 60s, and 70s. The majority of the robo-advisor users we surveyed are in their 30s (49.8%).
Studies have shown that older investors tend to have more complicated financial circ*mstances that require the assistance of a human financial advisor. In addition, these investors may have less trust in technology when it comes to managing their finances. A study conducted by PLOS ONE regarding the acceptance of robo-advisors found that Gen Z and Gen Y are more likely to use a robo-advisor because they find it easy to use, while members of Gen X "would need to fully understand robo-advisors before they commit to such financial resources.” The limitations of many robo-advisors, particularly in how they invest funds, can be difficult for investors to understand and accept, especially for those nearing retirement and who need to take a more conservative investing approach.
Most Investors Have Some Concerns About Current Market Conditions
At the time our survey was conducted—Aug. 30 to Sept. 15, 2023—the U.S. equity market, measured by the S&P 500, was experiencing a correction within a larger trend of rising prices that began in the fall of 2022. Of the investors we surveyed, more were worried than not about market events, with 69% responding that they are a little or somewhat worried about market events, and 17% revealing they are very or extremely worried. Only 14% of respondents had no concerns.
But while most of our respondents said they had concerns about the market, our survey showed that they are sticking to their investment plan. Many robo-advisors allow investors to set their financial goals, which can correlate directly to their risk appetite, but 49% of our respondents said they plan on making no change to the amount of money they are investing. About 27% said they actually plan on investing more, while 24% said they are looking to invest less.
Most Investors Turn to Online Publications to Learn About Investing
When asked to rank how they get most of their information about investing, most survey respondents ranked online publications as their number one choice. Conversely, watching ads for financial products was ranked last.
Commercial Ads Are Rarely Used by Investors When Choosing a Robo-Advisor
When given the opportunity to express how much they rely on commercial information (ads)to choose the right robo-advisor that fits their needs, 29% of respondents said they rarely rely on commercial information (ads). This is in contrast with just 11% of investors who said they always rely on commercial ads.
Planning Tools and Services, Custom Portfolios, and Retirement Calculators Are the Top Investing Topics That Interest Robo-Advisor Users
Given the complex nature of markets and the multiple goals that investors need to plan for, there simply is no singular investing approach. Fortunately, technology and competition have combined to give investors access to a variety of powerful robo-advisor platforms with fees much lower than traditional advisors.
When asked to choose from a list of investing topics, survey respondents said that fee-based financial planning services and free planning tools interested them the most. This was closely followed by personal indexing and financial and retirement planning calculators. Beyond these top three topics were stock slices, environmental, social, and governance (ESG) investing, thematic investing, and working with a financial consultant at the brokerage.
The Bottom Line
Markets are inherently cyclical, with periods of rising and falling prices defining their long-term returns. While they are automated investment platforms, the best robo-advisors offer robust risk assessment, portfolio management, and customization features needed to help put investors on the right path to a diverse set of investment goals—like buying a house, purchasing a car, or paying for a vacation.
Investopedia’s 2023 Robo-Advisor Consumer Survey revealed that investors are using these digital wealth management tools for a variety of reasons, beyond just planning for retirement. Further, younger investors are embracing these tech platforms more than their older counterparts. Overall, it’s a movement in the right direction for investors who may not be able to pay for and access professional financial advice from a human advisor.
Methodology
Investopedia conducted a survey of 205 U.S. adults aged 18 to 72 who are current clients of one of 18 robo-advisors. Respondents opted-in to an online, self-administered questionnaire from a market research vendor. Data collection took place between Aug. 30, and Sept. 15, 2023, with 11 video interviews conducted with volunteer respondents from Sept. 7-17, 2023. Multiple quality checks, including screeners, attention gauges, comprehension evaluations, and logic metrics, among others, were used to ensure only the highest quality responses were included.
Correction - Oct. 2, 2023: This article has been updated to state that the study regarding generational uses of robo-advisors was published in the journal PLOS ONE.
