- Robo-advisors are expected to have $3.78 trillion in assets under management in two years.
- Younger generations are embracing robo-advisors more than older generations.
- Robo-advisors offer cost-effective and accessible options.
The emergence of robo-advisors has been one of the most significant changes in the quickly evolving world of finance. These robotic investment systems are increasingly gaining popularity. They provide users with low-cost and convenient investment solutions. According to BanklessTimes.com, the assets under management (AUM) for robo-advisors will reach $3.78 trillion by 2025. This represents a significant growth from 1.10 Trillion in 2020.
BanklessTimes Jonathan Merry commented on the data:
The growth of the robo-advisory market highlights the increasing digitalization of investment management. Most people appreciate personal investment strategies that align with their objectives and risk tolerance. Just as importantly, they want cost-effective and accessible options. That’s exactly what robo-advisors offer.
North America was the largest global Robo Advice market region in 2021, accounting for roughly 39.4% of the market share and 4.13 billion in market sales. Yet, Asia is currently adopting robo-advisors at a faster rate than other regions.
Cost-Effective Alternative for Investors
Robo-advisors have grown in popularity over the past few years due to their simplicity and accessibility. They leverage algorithms to give investors customized investment strategies based on their financial goals, risk tolerance, and preferences.
These platforms typically charge lower fees than traditional financial advisors. Therefore, they are an attractive option for cost-conscious investors.
The growth of robo-advisors has been steady in recent years. More investors have become comfortable with using digital platforms for financial services. The COVID-19 pandemic has also accelerated the trend, as people have become more reliant on digital solutions for financial management.
The market size of robo-advisory services saw remarkable growth from $28.24 billion in 2022 to $41.52 billion in 2023. This represents a substantial compound annual growth rate (CAGR) of 47.0%.
Disruptive Force in the Financial Industry
The conventional financial business has been affected by the emergence of robo-advisors. Also, it is shaking the traditional wealth managers’ hegemony. Robo-advisors have democratized investing, making it accessible to more people. This has pressured traditional firms to lower their fees and adapt to the changing landscape. The shift towards digital platforms has also increased competition as new players enter the market.
The rise of robo-advisors has been one of the most significant trends in the financial industry in recent years. They have made investing simpler and more affordable for people who once could not access or afford traditional financial advisors, and their growth will continue to reshape the industry.
