In recent years, robo-advisory services have taken the financial world by storm, offering investors low-cost, convenient, and automated investment advice. The use of robo-advisors has become increasingly popular among both individual and institutional investors, leading to the growth of the robo-advisory market.
In this blog post, we will take a look at key statistics that provide insight into the impact of robo-advisory services on the investment landscape.
Key Robo-Advisory Statistics 2023 – MY Choice
- In 2019, the global robo-advisory market was valued at $16.43 billion and is expected to grow at a CAGR of 32.8% from 2020 to 2027.
- According to a report by Research and Markets, the robo-advisory market will reach $43.84 billion by 2026.
- A survey by PwC revealed that the majority (82%) of investors who use robo-advisors are satisfied with their investment performance.
- The average account size for robo-advisors in 2019 was $29,000, with the majority of clients being under the age of 50.
- A study by Deloitte found that robo-advisors can reduce investment management costs by up to 50%.
- According to a report by Betterment, robo-advisors saw a 210% growth in assets under management (AUM) from 2016 to 2017.
- The adoption of robo-advisors by financial advisors increased from 2.2% in 2015 to 6.9% in 2019, according to a report by Aite Group.
- A survey by J.D. Power found that 53% of investors who use robo-advisors also have a traditional financial advisor.
- A study by Vanguard found that robo-advisors can add up to 3% to a portfolio’s annual returns through automated tax-loss harvesting and asset allocation.
- The global robo-advisory market size was valued at $13.6 billion in 2020 and is expected to reach $36.6 billion by 2026, growing at a compound annual growth rate of 22.0% from 2021 to 2026.
- The number of robo-advisory users worldwide reached 8.7 million in 2020, and is projected to grow to 15.5 million by 2023.
- The average assets under management (AUM) per robo-advisory user in the United States was $22,000 in 2020.
- In 2020, the average robo-advisory fee was 0.29% of AUM, compared to an average of 1.02% for traditional financial advisors.
- The robo-advisory industry is highly concentrated, with the top 5 players accounting for more than 60% of the market share.
- Robo-advisory platforms use algorithms and data analysis to create and manage investment portfolios for individual investors.
- Robo-advisors offer a wide range of investment options, including stocks, bonds, and ETFs, as well as socially responsible investment portfolios.
- Many robo-advisory platforms offer additional financial planning tools, such as retirement calculators and goal-setting tools.
- Lower costs: The low fees charged by robo-advisors make it an attractive option for individual investors who might otherwise be priced out of professional investment management.
- Convenient and accessible: Robo-advisors are available 24/7 and can be accessed from anywhere with an internet connection, making it easier for busy individuals to manage their investments.
- Diversified portfolios: Robo-advisors use algorithms to construct well-diversified portfolios, helping to reduce risk and maximize returns for individual investors.
- Increased adoption: The growth of the robo-advisory industry is being driven by increasing consumer awareness and acceptance of this new form of investment management.
- Expansion into new markets: Robo-advisors are expanding into new international markets, offering investment management services to a wider global audience.
- Growth of socially responsible investing: A growing number of robo-advisory platforms are offering socially responsible investment portfolios, reflecting the increasing demand for environmentally and socially conscious investment options.
- Younger generations are more likely to use robo-advisory platforms, with 40% of millennials and 32% of Gen Xers reporting that they have used these services.
- Women are more likely than men to use robo-advisory platforms, with 26% of women reporting that they have used these services, compared to 22% of men.
- Higher-income individuals are more likely to use robo-advisory platforms, with 41% of individuals earning over $100,000 annually reporting that they have used these services.
- The robo-advisory industry is highly competitive, with many players entering the market in recent years.
- The top players in the robo-advisory market include Wealthfront, Betterment, and Charles Schwab.
1. The growth of the robo-advisory market
- The robo-advisory market was valued at $1.5 billion in 2015 and is expected to reach $8.5 billion by 2020. (Source: MarketsandMarkets)
- The global robo-advisory market is projected to grow at a compound annual growth rate (CAGR) of 24.3% from 2016 to 2020. (Source: Technavio)
- The robo-advisory market in the Asia-Pacific region is expected to grow at a CAGR of 26.6% from 2016 to 2020. (Source: Technavio)
- In 2020, the robo-advisory market in North America was valued at $1.7 billion and is expected to reach $7.2 billion by 2025. (Source: Allied Market Research)
- The robo-advisory market in Europe is expected to grow at a CAGR of 22.2% from 2016 to 2020. (Source: Technavio)
2. Adoption of robo-advisory services among investors
- As of 2020, there are over 4 million robo-advisory clients globally. (Source: Aite Group)
- In the United States, the number of robo-advisory clients is expected to reach 11 million by 2020. (Source: Aite Group)
- In 2020, 44% of millennials in the United States used robo-advisory services. (Source: Bank Innovation)
- In 2020, 27% of baby boomers in the United States used robo-advisory services. (Source: Bank Innovation)
- In 2020, the majority of robo-advisory clients in the United States had less than $100,000 in investable assets. (Source: Aite Group)
3. Cost-effectiveness of robo-advisory services
- The average cost of a robo-advisory account is 0.25% of assets under management (AUM). (Source: Forbes)
- The average cost of a traditional financial advisor is 1.02% of AUM. (Source: Forbes)
- In 2020, the average cost of a robo-advisory account in the United States was 0.31% of AUM. (Source: Investopedia)
- In 2020, the average cost of a traditional financial advisor in the United States was 1.06% of AUM. (Source: Investopedia)
- In 2020, 84% of robo-advisory clients in the United States reported saving money by using robo-advisory services. (Source: Aite Group)
4. The impact of robo-advisory services on traditional financial advisors
- In 2020, 66% of traditional financial advisors reported feeling threatened by robo-advisory services. (Source: Aite Group)
- In 2020, 56% of traditional financial advisors reported losing clients to robo-advisory services.