HOW ARE ROBO ADVISORS IMPACTING WEALTH MANAGEMENT GLOBALLY?
available to invest. Fortunately, one of the
For now, I think it’s safe to say that
goals of robo-advisors in the first place is
robo-advisors are great for basic wealth
to allow more people to invest with less
management activities such as portfolio
It’s safe to say that robo-advisors are more
required money to begin.
diversification, building customised
popular among younger generations,
investment plans to your personal risk
COUNTRIES ADOPTING ROBO ADVISORS FOR WEALTH MANAGEMENT
tolerance, portfolio rebalancing, and
The five countries that have the most
companies that offer their robo-advisor
In fact, that may be a clear indicator of
assets under management within the
customers the ability to set up a meeting
how the growth of robo-advisors will
robo-advisor segment are:
with a human financial expert for more
due to their natural understanding of technology, having grown up with smartphones and voice assistants.
trend globally with younger generations becoming more dominant as the years progress. Consider the following market trends, courtesy of Statista.com.
ASSETS UNDER MANAGEMENT
1. The United States - with $682.73 billion under management 2. China - with $74.57 billion under management
In 2017, the reported assets under
3. Japan - with $30.32 billion under
management within the robo-advisor
management
segment was $297.72 billion. Today, the total assets under management in 2020
4. The United Kingdom - with $18.23 billion
is projected to be $987.49 billion or over
under management
three times as much as reported in 2017. 5. Italy - with $15.27 billion under By 2024, the total assets under
management
management within the robo-advisor segment is projected to be $2.487 trillion!
NUMBER OF ROBO ADVISOR USERS
As you can see, the potential growth opportunity for robo-advisors is massive, and one that is likely to spread to more
In the year 2017, the total number of users
countries extremely fast. The stock market
within the robo-advisor segment was
alone has a total market capitalisation size
approximately 42.78 million. Today, the
of approximately $70.75 trillion, leaving a
total number of reported users for 2020
lot of untouched territory for the robo-
is 224.52 million. That’s over five times
advisor industry.
growth in just three short years. Suffice it to say that we’re still in the The number of total robo-advisor users
beginning stages of the global impact of
in the year 2024 is projected to be
robo-advisors.
approximately 436.33 million users, or almost double what it is today.
ARE ROBO ADVISORS BECOMING THE NEW NORM?
AVERAGE ASSETS UNDER MANAGEMENT PER USER
Are robo-advisors taking the place of the
While the total assets under management
cases, yes. But I would consider the
and total number of robo-advisor users
growing robo-advisor trend more of a shift
have been on a drastic upward trend,
in how business is done than anything
the average amount of assets under
else.
traditional financial advisor? In some
management per user has slightly declined since 2017 from $6959 down to $4398. It’s expected to grow to about $5700 by the year 2020.
Traditional financial advisors will most likely always be needed. Janine Menasakanian, the director of
What does this data suggest? More people
Key Accounts at one of the most famous
can invest today due to the growth and
investment companies today, Vanguard,
convenient features of robo-advisors.
believes that “Robo is great for simple,
Naturally, as younger investors enter the
self-directed work, but not for complex
market, they will likely have less money
planning activities.”
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tax-loss harvesting. Most robo-advisors are gateway products for investment
complex planning. It’s a great option to start investing if you don’t have much experience, don’t have extra money to pay for a costly advisor, and don’t have complex investing needs like detailed estate planning, tax planning, and business succession plans. Roboadvisors are here to stay and will continue growing at an accelerated pace.