A new study has found that robo-advisor platform revenues will reach $25 billion by 2022, up from an estimated $1.7 billion in 2017, as the automation of wealth management revolutionises the way individuals invest.
The new research, Fintech Futures: Market Disruption, Leading Innovators & Emerging Opportunities 2017-2022, from Juniper Research found that robo-advisors will make investments more compelling to HNWIs (High Net Worth Individuals) and lower income individuals, with average fees estimated as low as 0.6% of assets under management in 2022, with disruption from new players such as Moneybox and Nutmeg.
Juniper found that robo-advisors are broadening the appeal of the wealth management market, with their delivery method via intuitive smartphone apps making the investment process far more convenient, offering a compelling reason for millennials to invest.
The study found that this will drive total assets under management by robo-advisors upwards twelvefold, to $4.1 trillion in 2022, from an estimated $330 billion in 2017.
Juniper predicted that robo-advisors will become increasingly more automated over time, as AI & machine learning based approaches mature. Research author Nick Maynard added: “The technologies powering robo-advisors will mature to such an extent that they move from their current human supervised role to being utilised in a fully automated way. This will be aided by track records of performance automated robo-advisor systems are establishing.”
Potential Savings From Automation Tempting Existing Players Into Investment
While new entrants are disrupting the market, traditional wealth management players are also adopting new technologies to evolve their business models.
Providers such as BlackRock and Aberdeen Asset Management have invested in robo-advisor start-ups, such as Scalable Capital, FutureAdvisor and Parmenion. The study found that the appeal of these technologies is clear to established players, as automated systems, even in a limited role, will enable significant cost reductions and therefore increase their overall quality of service and profitability.
Maureen Akello, East Africa
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