Robo-advisors are platforms that use algorithms to manage users’ investment platforms. And they are threatening to upend the enormous global wealth management industry. Globally, wealth managers were responsible for $74 trillion in assets under management (AUM) in 2014. BI Intelligence forecasts that robo-advisors will manage around 10% of total global assets under management (AUM) by 2020.This equates to around $8 trillion.
Here are some of the key takeaways from a new report from BI Intelligence:
- Large incumbent wealth managers won’t lose out to startups like Betterment and Wealthfront. Instead, they are embracing the technology and launching their own products, which are scaling quickly.
- Consumers across all asset classes are receptive to robo-advisors — including the wealthy. 49% of this group would consider investing some of their assets using a robo-advisor.
- The majority of assets managed by robo-advisors will come from people who already have some investments. We estimate that the volume of assets that comes from people who don’t currently invest will be less than 1% of the total by 2020.
- Startups are going to find it difficult to scale, and will need to differentiate their products to succeed. They are already doing this by providing white label services to wealth managers, and more customized stand alone solutions.
Disclosure: This website is a collection of public articles, and this communication is for informational purposes only. Nothing herein should be construed as my opinion, solicitation, recommendation or an offer to buy or sell any securities or product, and does not constitute legal or tax advice. The information contained herein has been obtained from publicly available sources believed to be reliable but we do not guarantee accuracy or completeness. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional investment, legal, tax, or accounting counsel.
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