Robo-Advice is not about tomorrow anymore. It’s about today.
A robo-advisor is an online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners. Robo-advisors are typically low-cost, have low account minimums, and attract younger investors who are more comfortable doing things online. The idea made sense to many, and robo-advisors quickly gained market traction. Full-service, high-value-added, person-to-person activity isn’t for everybody. There are generations of tomorrow’s investors coming through today, who are more attracted to something less person-to-person and more technologically enabled.
The rapid rise of Robo-Advisors
Robo-Advice is changing the landscape of global wealth management. Historically, investment management was the purview of the wealthy. With robo-advisors flooding the investment markets, offering low-fee, diversified professional management, the investing landscape is evolving.
The number of robo-advisors is growing rapidly. New consumer brands are emerging in the digital wealth management industry such as Betterment, Wealthfront and Personal Capital.
In its report, BI Intelligence forecasts that robo-advisors will manage around $8 trillion of total global assets under management (AUM) by 2020.
TOP trends and challenges in wealth management for the next years
- Robo-advisors disrupt the wealth management industry. In the near future, advisors that will wait for the transition to robo-advisor will lose out. Investors will migrate towards those lower-fee providers with technology platforms.
- We observe the strong influence of technology within the entire investing environment. Many investors trust technology and expect 24/7 access and reporting.
- The competition increases rapidly. New consumer brands of pure robo-advisors appear in the digital wealth management industry, while traditional financial advisors ‘go robo’ as well.
- New regulations are directly impacting the financial advisory industry and driving companies to offer robo services as a way to meet the requirements.
- Investors increase pressure to lower fees. Robo-Advisors serve a wider range of customers and allow to stay profitable in lower fees environment.
- Artificial Intelligence enters the robo-advisory industry and could be the strongest competitive advantage. Robo-Advisors soon will offer more diversified investment products.
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