Revenues earned by the robo-advice industry could shoot up to $25bn by 2022, more than ten times what revenues were worth in 2017, new research shows.
The findings were revealed in a study by Juniper Research.
The research predicts revenues generated by the robo-advice industry to reach as high as $25bn by 2022, up from an estimated $1.7bn in 2017 thanks to automated wealth management services.
Robo-advisers will make investments that appeal to a wider segment of high net worth individuals (HNWIs) and to lower income individuals for as little as 0.6% of assets under management (AUM), Juniper said. This is due to new disruptive fintechs such as Moneybox and Nutmeg.
Juniper also said robo-advisers are making the investment process far more convenient by changing their delivery methods. They are specifically targeting smartphone apps, offering millennials more compelling reasons to invest.
According to Juniper this would drive AUM held by robo-advisers to about $4.1trn by 2022, up from $330bn in 2017.
Nick Maynard, who authored the research, said: “The technologies powering robo-advisers 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-adviser systems are establishing.”
The implementation of robo-advice is not restricted to new participants, with even traditional players inching towards the service.
BlackRock, currently the world’s largest asset manager, and Aberdeen Asset Management have partnered with robo-advisory startups.
Juniper said: “The appeal of these [robo-advice] technologies is clear to established players, as automated systems even in a limited role will enable significant cost reductions and therefore increase overall quality of service and profitability [for traditional players].”