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The robo advisory services market size is projected to increase by USD 1.306.37 billion, at a CAGR of 9.16% between 2023 and 2028. The growth rate of the market depends on several factors, including the growing adoption of AI and ML, the growing integration with wealth management platforms, and the rising demand for passive investing.
The market growth and forecasting report includes key player's detailed analyses of the competitive landscape of the market and information about 20 market companies, including, Axos Financial Inc., Betterment LLC, FMR LLC, Ginmon Vermogensverwaltung GmbH, JPMorgan Chase and Co., M1 Holdings Inc., MFM Investment Ltd., Robinhood Financial LLC, Scalable Capital GmbH, SigFig Wealth Management LLC, SoFi Technologies Inc., Stash Financial Inc., The Charles Schwab Corp., The Vanguard Group Inc., Wealthfront Corp., Wealthify Ltd., Bank of America Corp., and BlackRock Inc. Additionally, ACORNS ADVISERS LLC company offers automates the investing process, so it can buy and sell securities and rebalance the portfolio on a regular basis.
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The growing adoption of AI and ML is the key factor driving the market. AI and ML algorithms enable to analysis of large volumes of financial data quickly and efficiently. These technologies can identify patterns, trends, and correlations in data that may not be apparent to human analysts, leading to more informed investment decisions and improved portfolio performance. AI and ML algorithms can be used to develop predictive models that forecast market trends, asset price movements, and portfolio performance. By analyzing historical data and identifying relevant patterns, these models help to anticipate market shifts and make proactive investment decisions to optimize portfolio returns and mitigate risks.
Furthermore, AI and ML algorithms can learn from past investment decisions, client interactions, and market outcomes to continuously improve their performance over time. By incorporating feedback loops and adaptive learning mechanisms, they can evolve and refine their algorithms to deliver better outcomes for investors. Thus, the use of AI and ML empowers robo-advisors to deliver more sophisticated, efficient, and personalized investment solutions, which will enhance the expansion of the market during the forecast period.
The growing adoption of hybrid models is the primary trend shaping the market. Hybrid models combine automated investment platforms with human advisors, offering investors the benefits of both technology-driven automation and personalized guidance. Investors seek personalized financial advice and tailored investment solutions that address their specific goals, risk tolerance, and preferences. Hybrid models leverage technology to deliver efficient portfolio management while offering access to human advisors for more complex financial needs and emotional support.
Moreover, hybrid robo-advisory models build trust and confidence by offering access to human advisors who can provide personalized guidance, answer questions, and address concerns, particularly during periods of uncertainty. Further, investors benefit from the convenience of digital platforms for routine transactions and portfolio monitoring while also having access to human advisors for more in-depth discussions and financial planning sessions. Thus, the growing adoption of hybrid models will strengthen the development of the market during the forecast period.
Concerns associated with data security and privacy is a major challenge that affects the market expansion. Data breaches, hacking attempts, malware attacks, and phishing scams pose significant cybersecurity threats to robo-advisory firms and their clients. Further, these firms often depend on third-party service providers, such as cloud computing providers and data analytics vendors, to support their operations. Third-party risks, including data breaches, service disruptions, and inadequate security measures, can compromise the security and privacy of client data. Insider threats, such as employee negligence, misconduct, or malicious intent, pose a significant risk to data security and privacy.
Furthermore, the ethical use of client data is a growing concern for these firms. Ethical considerations, such as algorithmic bias, fairness, and transparency, raise questions about the impact of automated investment decisions on investors' financial well-being and the potential for discriminatory outcomes. Thus, the concerns associated with data security and privacy of robo-advisory platforms will impede the expansion of the market during the forecast period.
The market share by the high net worth individuals segment will be significant during the forecast period. High net worth individuals (HNWIs) often seek cost-effective solutions for managing their wealth. HNWIs value tailored solutions that align with their specific financial objectives and constraints. These advisory platforms often provide transparent reporting a easy-to-understand analytics, empowering HNWIs to monitor their investments closely and make informed decisions. The ability to maintain control over their portfolios while leveraging automation is appealing to many HNWIs.
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The high net worth individuals segment showed a gradual increase in the market share of USD 1,095.31 billion in 2018. Furthermore, countries such as the US and India, with growing populations of tech-savvy investors, including younger generations comfortable with digital platforms, are more likely to experience increasing demand for such services. The presence of established financial institutions, as well as the emergence of innovative startups in the fintech space, increases the demand for robo advisory market. Thus, these factors will boost the expansion of the segment of the market during the forecast period.
The portfolio segment will account for the largest share of this segment.?Robo advisory market facilitates goal-based investing by helping investors set and prioritize financial goals, such as retirement planning, education funding, or wealth accumulation. Additionally, these services typically charge lower fees compared with traditional wealth management firms, making them cost-effective options for portfolio management. They leverage technology such as AI, ML, and analytics to streamline operations and pass cost savings onto investors, enhancing overall investment returns. Furthermore, the use of robo-advisory services for portfolio management encompasses a wide range of functionalities, such as asset allocation, tax optimization, global accessibility, and flexibility, which will boost the expansion of the portfolio segment of the market during the forecast period.
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North America is estimated to contribute 37% to the growth of the global market during the forecast period.
Technavio's analysts have provided extensive insight into the market forecast, detailing the regional trends and drivers influencing the market's trajectory throughout the forecast period. North America has a significant demand driven by tech-savvy consumers seeking convenient and accessible investment solutions. As investors become more fee-sensitive, the affordability contributes to their growing adoption. Furthermore, companies and financial institutions in North America have partnered with or acquired these firms to offer automated investment services to their clients. Thus, such factors will propel the expansion of the regional market during the forecast period.
The market forecasting report includes the adoption lifecycle of the market research and growth, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth and trends strategies.
Global Market Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Fincite GmbH: The company offers something big, like a home down payment, college fund, or their own retirement.
Other companies include:
Axos Financial Inc., Betterment LLC, FMR LLC, Ginmon Vermogensverwaltung GmbH, JPMorgan Chase and Co., M1 Holdings Inc., MFM Investment Ltd., Robinhood Financial LLC, Scalable Capital GmbH, SigFig Wealth Management LLC, SoFi Technologies Inc., Stash Financial Inc., The Charles Schwab Corp., The Vanguard Group Inc., Wealthfront Corp., Wealthify Ltd., Bank of America Corp., and BlackRock Inc.
Market analysis and report of qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market research report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018-2028
The robo advisory platforms have transformed the financial services sector by offering alternatives to traditional investment services. Leading firms like Charles Schwab Corporation integrate Artificial Intelligence (AI) to cater to Generation X and Millennial generations. However, concerns over security risks and data privacy concerns, necessitate compliance with SEC registration and securities laws enforced by Financial Industry Regulatory Authority (FINRA). Despite this, the market witnesses remarkable growth due to technological advances and strategic partnerships and collaborations. High-net-worth individuals increasingly favor hybrid robo advisors over substitutes, driving end-use concentration. Competitive benchmarking relies on historical data & forecasts and insights into company revenue shares. Regional opportunities are vast, with banks venturing into fintech robo advisors and direct plan-based/goal-based solutions for comprehensive wealth advisory.
The market is also evolving in the BFSI industry, with B2B Robo-advisors like Kenanga Digital Investing leveraging Advanced analytics and Big data. Despite Market uncertainty, these services offer efficient Employer-sponsored retirement plans, combating Cyber attackers with Digital technology. Regulatory frameworks like Financial Industry Regulatory Authority (FINRA) survey ensure compliance in this growing sector.
Robo Advisory Services Market Scope |
|
Report Coverage |
Details |
Page number |
155 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 9.16% |
Market Growth 2024-2028 |
USD 1,306.37 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
8.45 |
Regional analysis |
North America, Europe, APAC, South America, and Middle East and Africa |
Performing market contribution |
North America at 37% |
Key countries |
US, Japan, India, UK, and Germany |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
ACORNS ADVISERS LLC, Axos Financial Inc., Betterment LLC, Fincite GmbH, FMR LLC, Ginmon Vermogensverwaltung GmbH, JPMorgan Chase and Co., M1 Holdings Inc., MFM Investment Ltd., Robinhood Financial LLC, Scalable Capital GmbH, SigFig Wealth Management LLC , SoFi Technologies Inc., Stash Financial Inc., The Charles Schwab Corp., The Vanguard Group Inc., Wealthfront Corp., Wealthify Ltd., Bank of America Corp., and BlackRock Inc. |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the forecast period. |
Customization purview |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by End-user
7 Market Segmentation by Service Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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