Okay, first of all, let's define what we mean by digital advice, or robo-advice if you prefer. So what we mean here is financial advice that comes from an algorithm, and it's not delivered by a person. And as you can probably guess, by human advice, we mean financial advice delivered by someone that has trained and been qualified to provide advisory services. For background, our observations are based on a survey of 1,500 advice clients in the United States to quantify investors’ views on the value of human and digital advisory services. In the survey, we did not reveal that Vanguard was the sponsor of the study. The questions were constructed to measure three different categories of perceived value. The first one was portfolio value, which refers to the outcome of building a well-diversified portfolio tailored to an investor's preferences.

The second one is financial value, which revolves around planning to achieve desired financial goals. And finally, emotional value, which embodies the idea of financial peace of mind. So, regardless of the method of delivery, the investors we spoke to said they believe advice provides higher incremental portfolio value than going it alone. What that means is advised investors believe their portfolios are better having partnered with a human or robo-advisor, than if they were without their advisors. Specifically in terms of portfolio value, the perceived value-add to annual performance was 5% for human advice and 3% for digital only advice. In terms of financial value, we found that human-advised investors believe they were 16% closer to achieving their financial goals than without an advisor, while robo-advised investors believed they were 5% closer to their financial goals than without advice. And since we asked about their financial goals, which the median is $1 million, we can actually quantify the perceived financial value of advice in dollar terms. So human-advised investors believe they are $160,000 closer to achieving their financial goals because they work with a human financial advisor.

For robo-advised investors, the perceived value-add was $50,000. To quantify emotional value, we asked investors if they felt a positive feeling of knowing that your investments are on track as a means of measuring peace of mind. So first, we asked whether people would have peace of mind without their financial advisors, managing their investments on their own. So we found that only 24% of human-advised clients would have peace of mind without their advisors.

However, 59% of robo-advised clients would have peace of mind without their advisors. Then we wanted to know if the investors had financial peace of mind working with their advisors. We found that 80% of human-advised investors had peace of mind, whereas 71% of robo-advised investors had peace of mind. When comparing the value-add of perceived emotional value with and without their advisors, robo-advised investors reported a 12 percentage point increase in peace of mind with their advisor, while human-advised investors reported a 56 percentage point increase in peace of mind thanks to their advisors.

When we asked human-advised investors what type of service they would choose if they had to leave their current advisor, 93% of investors would still want to work with a human advisor. In fact, 76% said they would choose another human advisor, whereas 17% said they would choose a hybrid service. Only 4% said they would switch to a digital advisor.

When we asked robo-advised investors if they would be willing to switch to a human advisor, 88% of them said they would be willing to switch, with the remaining 12% split between being indifferent or unwilling to switch. While the advice landscape is evolving with the breadth and depth of digital offerings becoming available, our research indicates investors maintain significant loyalty to human advisors.

At the same time, robo-advised investors reported a far higher likelihood to switch to a human advisor. We believe this has strong business development implications for human advisors: that robo-advised clients could represent an untapped and under-targeted market to convert to human advisors, especially as those investors’ needs become more complex over time.