Canadians prefer financial advisors to robo-advisors

Published in Investment Executive Magazine on May 24th, 2017. Click here to read the article on their site.

As financial services institutions worldwide throw their weight behind emerging technologies, Canadians appear to be more lukewarm about embracing them.

As financial services institutions worldwide throw their weight behind emerging technologies, Canadians appear to be more lukewarm about embracing them than residents of other nations, according to a new report from London, U.K.-based HSBC Holdings PLC.

The survey, which polled more than 12,000 individuals from 11 countries, suggests a divide in attitudes between Asia and the Western nations toward technology, including the adoption of robo-advisors.

Among Canadians, there's still a strong preference for taking guidance from a human financial advisor over advice generated through an algorithm powered by artificial intelligence.

In particular, of the 1,001 Canadians represented in the survey, a mere 7% said they're likely to trust recommendations delivered by a robo-advisor. That's in contrast to 44% in China and 38% in India.

Moreover, the survey suggests that only 18% of Canadians surveyed feel that robo-advisors are able to offer more accurate advice than their human counterparts.

Canadians' ambivalence about the benefits of technological innovation reflects a lack of trust in new technology, the report notes.

In fact, the poll suggests that Canadians are among the most content with their bank's existing technology services — and they may not be so enthusiastic over the use of fingerprint technology to identify themselves or chatbots.

Appetite for chabots, which can dish out information traditionally delivered by a customer service representative, for example, may not be as widespread in Canada. The report suggests that only 16% turn to chatbots for customer service help.

In general, many Canadians express doubts about technology's ability to improve the world, with only 56% saying innovation can yield positive change compared with 89% in China and 85% in India.

"While those in Canada may be more resistant to change than their eastern counterparts, the research also points to the huge potential of educating people on upcoming and existing technologies as Canadians are among the most likely to respond positively to education around biometrics — such as touch and voice ID," says Larry Tomei, executive vice president and head of retail banking and wealth management with Vancouver-based HSBC Bank Canada, in a statement.

Slow uptake of new technology among Canadians could affect support for innovation, hindering financial services' efforts in Canada to develop solutions for the domestic market.

To make clients more receptive to the adoption of new technologies, the report suggests the need for greater education, perhaps even a touch of human intervention, with traditional advisors using the new tools to complement the work they do.