Over the years, robo-advising has been the new form of technology that’s been rising in retail investments and is expected to be the next step in the evolution of asset management and financial decision-making. The robo-advisor space includes online platforms such as Wealthfront, Betterment, AssetBuilder, Covestor, Financial Guard, FutureAdvisor, Jemstep, MarketRiders, Personal Capital, Rebalance IRA and SigFig. These firms develop automated investment portfolios and recommendations for their individual clients. According to a study by Deloitte, these firms grew to ~19 billion AUM by the end of 2014—a ~65%-growth from the previous eight months.
"We think robo-advisors are great for our industry because what they do is raise the level of awareness about the importance of being financially responsible," said Tom Nally, President of TD Ameritrade Institutional.
LTP, along with GrowthPraxis, has come up with a new report titled US Robo-Advisor Threat Transforming Retail Investment: A Market Report. According to the report, the present market size of robo-advisory firms in the United States is $14B (AUM).
As mentioned in the report, the drivers for robo-advisors are:
- Lower account minimums: Wealth management firms require investors to have a minimum of $100,000 or more in investable assets. Robo-advisers have investment minimums in the low four-digit numbers.
- Lower fees: Robo-advisors are inexpensive. Traditional wealth management services charge 1% of assets under management or more; the typical fee charged by a robo-adviser is lower, depending on account size.
- Upgrading technology: The rapidly evolving technology not only “crunches numbers” but also assimilates, categorizes, analyzes and differentiates—making higher-level decisions; the emergence of mobile technology is the key for growth.
- Demographic advantage: Investors of all ages are using robo-advisors, but not surprisingly, they are especially popular among millennials and Generation Xers who grew up with technology.
According to the report, the market size of retail Investments in the US is estimated to be $ 15 trillion by 2015.
In recent years, the number of online execution-only investment platforms has risen dramatically. 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.
Key questions answered by the report:
1. What is the market size, market share and market potential for robo-advisors?
2. Who are the major players in the robo-advisory market?
3. Future forecast for robo-advisory
4. What were the recent investments made in the robo-advisory market?
Table of Contents:
- Evolution of Retail Investment Tools
- Overview of Robo-Advisors
- Drivers and Inhibitors for the robo-advisors market
- Value chain analysis of robo-advisors
- SWOT analysis of robo-advisors
- Competitive landscape for robo-advisors
- Market size, market share and market potential for robo-advisory
- Players landscape
- Company profiling
- Forecast: Robo-advisor market
- Major investors in robo-advisor companies
- Recent mergers and acquisitions in robo-advisory