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Robo-advisory Services Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

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  • 120 Pages
  • January 2022
  • Region: Global
  • Mordor Intelligence
  • ID: 5120011

The Robo-advisory Services Market is expected to register a CAGR of approximately 40.3% during the forecast period (2021-2026). The rapid digitization of the BFSI industry has accelerated the growth of digital investments in which the Robo-advisors are playing a major role. The Robo-advisory services are beneficial majorly for passive investors who do not prefer personal monitoring of their portfolio development.

Key Highlights

  • Rapid automation of processes and businesses across end-user industries is acting as a major catalyst for the adoption of Robo-advisory services. These services eliminate human labor, as the online platforms offer the same services at a fraction of the cost. Also, the services are available 24/7 as long as the user has an Internet connection.
  • Several emerging economies are stimulating the regional players to enhance their testing and research of Robo-advisory services. These initiatives are further expected to act as a catalyst for market growth. For instance, Saudi Arabia's Capital Market Authority (CMA) approved Wahed Capital and Haseed Investing Company to test its Robo-advisory services. This was done as part of the country's strategy to encourage the use of financial technology in the Arab economy.
  • Further, amidst the global coronavirus outbreak, lockdown, and market uncertainty, a surge in B2B Robo-advisors, Digital investing, financial advice and portfolio management is witnessed globally. Several companies have reported an increase in digital investing activities by the investors in the first quarter of 2020 as compared to 2019. For instance, Betterment LLC reported an increase in the number of account openings by 25%, while Wealthfront Inc. reported an approximately 68% rise in digital investing activities since the market downturn.

Key Market Trends

Investment Advisory Expected to Gain Maximum Traction

  • Robo-advisory services majorly include investment advisory services related to the personal finance of individuals. Robo-advisors are rapidly filling the gaps created by human investment advisors, such as capability, capacity, and cost, majorly due to the increase in the adoption of digitization across the investment industry, coupled with the adoption of AI in robotics.
  • FinTechs across the world rely upon both technology and personal advisory. They are rapidly creating robo-advisory services by adopting technologies such as AI and ML, which will offer accurate and transparent advisory services to the retail investors, which will further prevent them from making inaccurate investment decisions.
  • In July 2019, Voya Financial launched a platform, which is a hybrid robo-advisor, designed to help its advisors become more efficient and be able to better communicate with the broker-dealer. The firm’s hybrid model will have an advantage because it’s not a direct-to-consumer.

North America Expected to Dominate the Market

  • The North America region is expected to dominate the market owing to the presence of several market players in the region, such as Betterment LLC, Charles Schwab & Co., Inc., Wealthfront Inc., and Vanguard Group, amongst others. Also, the region has leaded other regions in terms of technological advancement and the robotics industry.
  • The company's major financial institutions are making product innovations and developments to leverage the first-mover advantage and gain maximum market traction. For instance, in January 2020, Citigroup unveiled a new digital Robo-advisor, which will provide free services to the Citi's Priority customers who hold at least USD 50,000 in deposits or investments at the bank.
  • Several financial institutions are still in the development phase to innovate and develop highly advanced platforms offering robo-advisory services to their customers. For instance, the Vanguard Group plans to launch a Robo-advisory service, which the company claims is expected to eliminate human advisory.
  • Goldman Sachs is planning to launch digital wealth management services for customers with lesser investments, ranging from as low as USD 5,000 in 2020. Such initiatives and investments by companies in the region are expected to boost the market's dominance in the forecast period.

Competitive Landscape

The competitive landscape of the Robo-advisory Services Market is consolidated owing to the presence of major players like Betterment LLC, Wealthfront Inc, The Vanguard Group, amongst others holding the majority of the market share. These market players are making product innovations to capture maximum market share globally. Also, the government of several economies is stimulating smaller vendors to enter the market with innovative products or by forming strategic collaborations.

  • May 2020 - UOBAM launches Robo-advisory services, UOBAM Invest, providing customized investment portfolios online to help companies meet their investment goals. Corporate investors with a minimum investment of RM 500,000 will be able to utilize UOBAM Invest.
  • February 2020 - Grab Holdings acquired Bento Invest, a Singapore-based Robo-advisory start-up, that will offer the company’s clients retail wealth management solutions. The aim of the acquisition is to tap the underbanked population in Southeast Asia that do not have access to investment tools easily or might find it expensive even if they do.

Additional Benefits:

  • The market estimate (ME) sheet in Excel format
  • 3 months of analyst support

This product will be delivered within 2 business days.

Table of Contents

1.1 Study Assumptions & Market Definition
1.2 Scope of the Study
4.1 Market Overview
4.2 Market Drivers
4.2.1 Digitization of the BFSI Industry
4.2.2 Cost-efficiency in Managing Personal Finance
4.3 Market Restraints
4.3.1 Lack of Human Expertise and Empathy
4.3.2 Nascency of the Technology
4.4 Industry Attractiveness - Porters 5 Force Analysis
4.4.1 Bargaining Power of Suppliers
4.4.2 Bargaining Power of Buyers/Consumers
4.4.3 Threat of New Entrants
4.4.4 Threat of Substitute Products
4.4.5 Intensity of Competitive Rivalry
4.5 Analysis of Impact of Covid-19 on the Market
5.1 By Type of Services
5.1.1 Investment Advisors
5.1.2 Wealth Management
5.1.3 Retirement Planning
5.1.4 Tax-loss Harvesting
5.2 Geography
5.2.1 North America
5.2.2 Europe
5.2.3 Asia-Pacific
5.2.4 Rest of the World
6.1 Company Profiles
6.1.1 Betterment LLC
6.1.2 Wealthfront Corporation
6.1.3 The Vanguard Group, Inc.
6.1.4 Charles Schwab & Co., Inc.
6.1.5 BlackRock, Inc. (FutureAdvisor)
6.1.6 FMR LLC (Fidelity Go)
6.1.7 Roboadviso
6.1.8 M1 Holdings Inc.

Companies Mentioned

A selection of companies mentioned in this report includes:

  • Betterment LLC
  • Wealthfront Corporation
  • The Vanguard Group, Inc.
  • Charles Schwab & Co., Inc.
  • BlackRock, Inc. (FutureAdvisor)
  • FMR LLC (Fidelity Go)
  • Roboadviso
  • M1 Holdings Inc.