The Covid-19 market crisis was the first big test for robo-advisors, and judging from a Dalbar study comparing insights between investors with robo-advisors to those with traditional financial advisors, they scored more than a passing grade.

Investors between the ages of 31 to 45 had the greatest satisfaction with their advisor. That represented 46% of traditional investors and 69% robo-investors. Traditional investors ages 46 to 75 had relatively low satisfaction ratings with their advisor, according to the Investor Insights: COVID-19 and Robo-Advice study.

“They came out looking pretty good in this particular instance, there is no doubt about that,” said Cory Clark, chief marketing officer at DALBAR, a Massachusetts-based company that evaluates, audits and rates business practices and service in the financial community.

Robo-investors, he said, were satisfied with their experience during the crisis and they seem to be happy where they are.

The study examined the experiences of 500 investors who worked with a traditional advisor and 500 who engaged with a robo-advisor in 2020.

Clark said it was apparent even before cross-referencing the data that satisfaction was high for both traditional and robo-advisors during the crisis, but it was obvious that robo-investors reported greater overall satisfaction.

The study revealed that more than half (55%) of robo-investors said that confidence in their advisor increased significantly during the crisis and 47% said the same for trust. That compared to 28% of traditional investors who said their confidence in their advisor increased and 29% who said they gained trust in their advisor.

Most robo-investors (90%) said their account balance grew thanks to help from their advisor, compared to 75% of traditional investors who said the same.

“When you consider the profile of the average robo-investor, along with the fact that most believe their account balance is higher today because of the help of their robo-advisor, it makes sense that trust and confidence would surge as a result,” Clark said.

The study also showed that while both types of investors indicated they are more likely to stick with their advisor following the Covid-19 market crisis, robo-investors reported a greater likelihood (92% versus 82%) of retaining their advisor.

During the crisis, traditional advisors (48%) were more likely to contact their client, the study said. That compares to 28% of robo-advisors. In that vein, robo-investors were more likely to receive proactive or aggressive communication such as whether to invest more or cash out. The traditional investor, the study showed, was more likely to be told to stay the course.

It should be noted that proactive communication was cited as the most important factor in building trust during the market crisis for both types of investors.

The difference in satisfaction, Clark noted, was not driven by the recommendations that were provided but by the difference in expectations of the investors. He explained that the robo-investor believes that performance is most important, followed by transparency around performance, whereas the traditional investor placed a higher priority on customer service.

“The traditional investor expects and wants the communication, and they were more punitive in terms of the satisfaction if they don’t get the communication they expect,” Clark said, adding that the robo-investor is quite content with a systematic email or communication through the app or whatever way they are able to communicate efficiently.

Other key findings in the study include: