On the other hand, they tended to lean more towards digital and automated mentoring for portfolio building and activities with an emphasis on functional tasks. They include, among other things, efficient management of taxes and capital gains; accounting for various market conditions or scenarios of life events; preventing details or even entire accounts from being ignored; and simplification for organized, cohesive management.
The results also show that regardless of which way it is distributed, investors tend to believe that taking advice leads to significantly higher incremental portfolio value than going it alone with investing. But while the value-add of human mentoring for annual exposure was 5%, it was only 3% for digital mentoring.
However, there is an asterisk to that finding. Whereas human-advised clients assumed their investment returns were 15% over the past three years, digitally-advised clients estimated that their returns were 24% over the same period.
“One possible explanation for this could be that the two samples of investors are different,” Costa and his co-author Jen Henshaw said in the report. “For example, digital-advised investors tend to be younger and self-report more aggressive in their investments, which drives them to higher performance in recent years.”
The study found that investors who worked with human investors estimated they were about $160,000 closer to achieving their financial goals. In addition, three times more investors report peace of mind when working with a human advisor than if they had attempted to invest on their own.