December 30, 2014
$15.7 billion is the amount of money managed by the online investment platforms dubbed as robo-advisers. The analysis has been brought to light by research and consulting firm Corporate Insight as reported by Business Insider. By analyzing 11 leaders in the field this December, Corporate Insight has determined that since its last analysis, these robo-advisers have taken more than another $3 billion under management for a total of nearly $19 billion.
This number represents a 21% increase since July, and a 65% increase since the first time the data was collected in April. 'The continued growth of the newcomers and the recent actions of the major players prove that online advice is not a fleeting fad. Human advisers must realize that the disruptive powers of the web and automation are here to stay,' as cited by Corporate Insight analyst Grant Easterbrook to Business Insider.
Corporate Insight looked at the influence of online platforms such as Wealthfront, Betterment, Assetbuilder, Covester, Financial Guard, FutureAdvisor, Jemstep, MarketRiders, Personal Capital, RebalanceIRA, and SigFig. Easterbrook says the innovative new partnerships and products announced by Fidelity, TD Ameritrade, TradeKing, and Charles Schwab, as well as the $161 million raised in funding rounds by four of these 11 robo-advisers this year, is clear evidence that robo-advice is being welcomed into the mainstream.
In recent years the number of online execution-only investment platforms has risen dramatically. Platforms allow you to buy and hold different assets - like shares, bonds and funds - within tax wrappers, like ISAs and SIPPs, or outside of them as singular investments. Part of the benefit is that you can conveniently hold your investments in one place, making it easier to monitor performance and make time sensitive decisions while on the go. Most modern day execution-only platforms offer access to company details, thorough research and easy to manage online trading tools.
There are lots of different types of platform out there and investors should pick one which is right for their needs. For example, some platforms offer foreign exchange and shares, which will be a total turn-off for someone just looking to take out a simple portfolio and wanting some help along the way. Firms that serve financial advisers are scrambling to help them integrate digital platforms that will enable them to profit from younger clients and those with fewer assets. Fidelity Institutional, TD Ameritrade Institutional and some smaller custodians are teaming with established online-advice providers so that advisory companies can offer a mostly automated solution for investment management or financial planning.