Global Robo-advisor Market Research Report 2023-Competitive Analysis, Status and Outlook by Type, Downstream Industry, and Geography, Forecast to 2029

Global Robo-advisor Market Research Report 2023-Competitive Analysis, Status and Outlook by Type, Downstream Industry, and Geography, Forecast to 2029

Robo advisor is an automated online wealth management service that helps investors to manage their funds, portfolios, and investments online with less human intervention. The digital platform uses algorithms to manage client portfolios and reduce costs for retail investors by automating investment advisory services at a fraction of traditional asset managers' fees. Robo advisor makes use of algorithm calculations to analyze the data and provide a comprehensive asset allocation approach that meets the investor’s goals. The Robo advisor industry has recorded continuous investments for its developments and has become a massive contributor to economic growth. Using digital technologies, robot advisors provide digital advice based on input from investors. Based on algorithmic calculations, robot advisors analyze client data such as their financial condition and provide comprehensive asset allocation solutions that meet their future financial goals. Rapid automation of processes and businesses across end-user industries is a major driver of Robo advisor adoption.

Market Overview:

The latest research study on the global Robo-advisor market finds that the global Robo-advisor market reached a value of USD 4636.99 million in 2022. It’s expected that the market will achieve USD 21878.1 million by 2028, exhibiting a CAGR of 29.51% during the forecast period.

With an unprecedented COVID-19 health crisis, the Robo-advisor services witnessed growth, owing to surge in adoption of Robo-advisors for efficient wealth and assets management in highly volatile markets during pandemic situation. The COVID-19 pandemic has demonstrated to investors the importance of online services for investment purposes. Clients who previously preferred to speak with a humanoid advisor and even now prefer to visit a bank branch are gradually changing their behavior. This is due to the fact that banks closed their divisions when governments voted for a lockdown. Often, consumers did not expect such a radical move and thus were spending more time on alternative services, which can offer an adequate client experience. The impact of the covid on the Robo-advisor market is positive. Global concerns have grown since the outburst of COVID-19, which, combined with the constant oil-price war, have shook investors around worldwide. Backend benchmarking, which tracks performance by opening portfolios at leading Robo-advisors, found that most digital advisor-managed portfolios performed similarly during market swings. As the coronavirus forces more and more advisers into lockdown mode, the number of users on an online wealth management platform or Robo-advisor in wealth management has doubled. From wealth management companies’ viewpoints, advisors are spending time managerial clients that have been affected by coronavirus impacts – both personally and economically. For Robo-advisors, communication will be slightly different than traditional advisory firms. They will need to lean on digital collaboration tools at their disposal through email, push notifications, and in-app notifications. Innovative tools, such as chat functionality or video conference to connect with a team of advisors, could assist Robo-advisors in providing the human touch required to alleviate clients' anxieties during difficult times. Betterment and Personal Capital, for example, already provide financial advisor access as part of their premium services.

Rise of Robo advisors is expected to drive the growth

One of the most significant changes in FinTech has been the rise of the Robo-advisors. Their growth is primarily due to the fact that they have been able to reach a large segment of the public that does not have access to traditional consulting due to financial constraints, thereby bridging this gap. The financial services industry has been transforming and assisting advisory services in recent years. This revolution occurred at a time when the market was in the highest demand in history, thanks to the recent technological boom. To ensure that every individual has access to financial advice, new solutions have been added to the industry, which we call robot advising. Robo-advisors have gained the attention of investors and institutions seeking to understand the changing landscape. Nonetheless, despite their rapid growth, robot advisors hold a very small share of the market in comparison to traditional financial advice providers. Robot advisors use computer-based technology to redesign their portfolio management processes, creating a variety of algorithms to optimize clients' current asset portfolios and tax management. In practice, these robots can make trading recommendations in the stock market. Traditional investment advisory services have primarily served institutional clients. Individual investors could not seek assistance in this manner due to the high management costs. Furthermore, millennials are accustomed to reading electronic forms of communication. As a result, robot advisors are accessible to a large portion of the investing public.

Lack of expertise and the high initial costs

The lack of expertise and the high initial costs of Robo-advisor are estimated to restrict the market growth in the projected timeframe. Though the market is expected to grow over the forecast period lack of human expertise at almost all the levels can act as a restrain to the market. The security and compliance concerns are also expected to put a restrain on the growth of the market. Furthermore, the issues concerning the size of investments and the depth of expertise required to develop and manage Robo-advisor competencies in an environment with numerous legacy IT systems, and the high initial cost required for it can hinder the growth of the market.

Region Overview:

Geographically, United States held the largest market share – 68.34% in 2022.

Company Overview:

The Vanguard Group is one of the major players operating in the Robo-advisor market, holding a share of 12.99% in 2023.

The Vanguard Group

The Vanguard Group, Inc. is an American registered investment advisor based in Malvern, Pennsylvania. It is the largest provider of mutual funds and the second-largest provider of exchange-traded funds (ETFs) in the world after BlackRock's iShares. In addition to mutual funds and ETFs, Vanguard offers brokerage services, variable and fixed annuities, educational account services, financial planning, asset management, and trust services.

Charles Schwab Corporation

Charles Schwab Corporation also commonly known as Schwab, is an American multinational financial services company, bank, and stockbroker that offers an electronic trading platform along with traditional methods of investments for the trade of financial assets including common stocks, investment portfolios, preferred stocks, futures contracts, exchange-traded funds, forex, options, mutual funds, fixed income investments, margin lending, and cash management services.

Segmentation Overview:

As for product types, the Hybrid Robo Advisors segment held the largest market share in 2022.

Pure Robo Advisors

The main types of business models in Robo-advisor are pure Robo advisors and hybrid Robo advisors. A pure Robo advisor is a digital financial service that uses automated technology to help investors with financial solutions. In a pure Robo-adviser, customers interact solely with the electronic platform.

Hybrid Robo Advisors

A hybrid Robo advisor is a service that typically combines a professionally managed account (through the help of a Robo advisory service) with access to financial guidance or planning. For many hybrid Robo advisors, the guidance and planning services are available through phone or video calls with human financial advisors. By meeting over the phone and through a computer or app-based video conferencing, these services can come at a lower cost than meeting in person with a traditional financial advisor.

Application Overview:

The market's largest segment by application is the segment High Net Worth Individuals (HNI), with a market share of 40.54% in 2022.

Retail Investor

Robo advisory services offer exposure to retail investor to gain expertise in managing & diversifying their portfolio by investing into several instruments such as stocks, bonds, and certificate of deposit (CD).

High Net Worth Individuals (HNI)

By end-use, the HNI sub-segment is anticipated to hold the maximum market share in the global industry over the forecast period. This sub-segment growth is mainly because Robo advisor platforms have made investing more accessible, automated, and affordable by using mathematical algorithms to manage and set investment portfolios. In addition, the growing population of the HNI around the world and the rising need for Robo advisors to take the decisions have boosted the sub-segments growth.

Key Companies in the global Robo-advisor market covered in Chapter 3:

FutureAdvisor by BlackRock
Acorns Grow, Inc.
Personal Capital Corporation
Wealthfront, Inc.
M1 Holdings Inc.
Charles Schwab Corporation
SigFig Wealth Management, LLC
Blooom, Inc.
The Vanguard Group
Betterment Holdings, Inc.

In Chapter 4 and Chapter 14.2, on the basis of types, the Robo-advisor market from 2018 to 2029 is primarily split into:

Pure Robo Advisors
Hybrid Robo Advisors

In Chapter 5 and Chapter 14.3, on the basis of Downstream Industry, the Robo-advisor market from 2018 to 2029 covers:

Retail Investor
High Net Worth Individuals (HNI)
Others

Geographically, the detailed analysis of consumption, revenue, market share and growth rate, historic and forecast (2018-2029) of the following regions are covered in Chapter 8 to Chapter 14:

North America (United States, Canada)
Europe (Germany, UK, France, Italy, Spain, Russia, Netherlands, Turkey, Switzerland, Sweden)
Asia Pacific (China, Japan, South Korea, Australia, India, Indonesia, Philippines, Malaysia)
Latin America (Brazil, Mexico, Argentina)
Middle East & Africa (Saudi Arabia, UAE, Egypt, South Africa)