A new study from Juniper Research has found that roboadvisor platform revenues will reach $25 billion (€20.75 billion) by 2022, up from an estimated $1.7 billion (€1.41 billion) in 2017, as the automation of wealth management revolutionises the way individuals invest.
The new research, Fintech Futures: Market Disruption, Leading Innovators & Emerging Opportunities 2017-2022, found that roboadvisors will make investments more compelling to HNWIs (High Net Worth Individuals) and lower income individuals, with average fees estimated as low as 0.6% of assets under management in 2022, with disruption from new players such as Moneybox and Nutmeg.
Roboadvisors widening appeal of wealth management
Juniper found that roboadvisors are broadening the appeal of the wealth management market, with their delivery method via intuitive smartphone apps making the investment process far more convenient, offering a compelling reason for millennials to invest.
The study found that this will drive total assets under management by roboadvisors upwards twelvefold, to $4.1 trillion (€3.40 trillion) in 2022, from an estimated $330 billion (€273.88 billion) in 2017.
Juniper predicted that roboadvisors will become increasingly more automated over time, as AI & machine learning based approaches mature. Research author Nick Maynard added: “The technologies powering roboadvisors 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 roboadvisor systems are establishing.”
Potential savings from automation tempting existing players into investment
While new entrants are disrupting the market, traditional wealth management players are also adopting new technologies to evolve their business models.
Providers such as BlackRock and Aberdeen Asset Management have invested in roboadvisor start-ups, such as Scalable Capital, FutureAdvisor and Parmenion. The study found that the appeal of these technologies is clear to established players, as automated systems, even in a limited role, will enable significant cost reductions and therefore increase their overall quality of service and profitability.
The whitepaper, The Future of Fintech – Disrupt, Collaborate or Die, is available to download from the Juniper Research website together with details of the new research and interactive dataset.
Juniper Research is acknowledged as the leading analyst house in the digital commerce and fintech sector, delivering pioneering research into payments, banking and financial services for more than a decade.