Robo Advisory Market Segmentation By Type (Pure Robo Advisory and Hybrid Robo Advisory); By Services Type (Wealth Management and Cash Management) and By End User (Healthcare, Retail, Education and Others) – Global Demand Analysis & Opportunity Outlook 2028
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In 2022 & 2023, market players expected to sail in rough waters; might incur losses due to huge gap in currency translation followed by contracting revenues, shrinking profit margins & cost pressure on logistics and supply chain. Further, U.S. economy is expected to grow merely by 3% in 2022. Purchasing power in the country is expected to fell nearly by 2.5%.
On the other hand, European countries to see the worst coming in the form of energy crisis especially in upcoming winters!! Right after COVID-19, inflation has started gripping the economies across the globe. Higher than anticipated inflation, especially in western world had raised concerns for national banks and financial institutions to control the economic loss and safeguard the interest of the businesses. Increased interest rates, strong USD inflated oil prices, looming prices for gas and energy resources due to Ukraine-Russia conflict, China economic slowdown (~4% in 2022) disrupting the production and global supply chain and other factors would impact each industry negatively.
December 2019: Charles Schwab & Co., Inc. have announced the launch of Schwab Intelligent Income™, which is an income solution designed to modernize how investors can pay themselves in retirement or any other time from their investment portfolios.
December 2019: The Vanguard Group, Inc. have announced a joint partnership with Ant Financial to bring a new streamlined and broadly available investment advisory wealth management services to retail consumers in China.
Robo advisory are a type of online financial advisors that provides financial advice for managing investments. Robo advisors are self-guided and are based on advanced programming algorithms and mathematical rules and utilize moderate to minimal human intervention for providing advisory services. Historically, the first robo advisors were launched in the year 2008 and were used as online interface to manage and balance client’s assets by financial managers. Clients use robo advisory to adjust and customize the online investment in order to meet their long-term financial goals along with short term investment strategy.
The global robo advisory market is thriving on the back of growing financial industry and the continuous efforts of organizations to adopt new technologies to deliver financial services in cheaper and more efficient ways. Furthermore, growing need to manage assets of people for long term financial goals with minimal risk of loss are some of the factors anticipated to drive the growth of the global robo advisory market. According to The World Bank, insurance and financial services as a percentage of commercial service exports increased from 7.65% in the year 2005 to 8.56% in the year 2018.
The market is anticipated to record a robust CAGR throughout the forecast period, i.e. 2020-2028. The global robo advisory market is segmented by service type into wealth management and cash management, out of which, wealth management segment is anticipated to hold the largest market share on the back of growing household wealth amongst population as well as for the growth of affluence worldwide. Moreover, growing need amongst customers for asset allocation on the back of limited financial background knowledge is also anticipated to promote significantly towards the growth of the segment in the global robo advisory market. According to Global Wealth Databook 2019 of the Credit Suisse Research Institute, total household wealth in the world increased from USD 351,516 billion in the year 2018 to USD 360,603 billion in the year 2019. CLICK TO DOWNLOAD SAMPLE REPORT
Growing Number Of Internet Users And The Rise In Internet Penetration
According to International Telecommunication Union (ITU), number of individuals using the internet grew from 1100 million in 2005 to 3924 million in 2018 and is further estimated to reach 4131 million by 2019.
Increasing penetration of the internet worldwide and rise in the number of internet users is helping financial advisory companies to promote their advices related to investments, and further connect to the customers with mutual engagement and trust. Robo advisory services platform run on the back of internet technology infrastructure and requires its clients on the other end to equally associate into their platform via the internet. Such a factor also helps to significantly decrease the management cost of the financial wealth services providing company involved in providing financial advice through manpower, and thereby provide robo advisory services to clients at a minimal cost.
Increase in the Maturity of Digital Advice Technologies
Advancement in digital technology is helping to transform numerous industries worldwide. Several market forces are driving the need amongst organizations to transform digitally, such as, emergence of new ecosystems accessible through digital channels, reduced barriers to digital entry, reduced ownership of assets and infrastructure, and decoupled value chains among others. Financial advisory companies are adopting to technologies, such as, artificial intelligence (AI) on the back of the ability of the technology to think and act almost like humans and further continuously learn and use the knowledge to solve complex problems. This in return help the companies gain an extra competitive edge to serve their customers and enhance the delivery of advice. Moreover, with the adoption of the robo advisory technology, consumers find increased transparency into investment options and decisions. Furthermore, consumers can also access via the web or mobile apps to build diversified portfolios at minimal fees. Such factors are anticipated to drive the growth of the global robo advisory market throughout the forecast period.
Conflicts of Interests of the Clients
Rising concern amongst consumers for the definition and suitability of the financial advices, which may create a conflict of interests among the clients is anticipated to hinder the growth of the global robo advisory market during the forecast period.
Our in-depth analysis of the global robo advisory market includes the following segments:
By Type
By Service Type
By End User
By Region
On the basis of regional analysis, the global robo advisory market is segmented into five major regions including North America, Europe, Asia Pacific, Latin America and Middle East & Africa region.
North America and Europe are the regions anticipated to hold the largest market share on the back of increased awareness amongst consumers for robo advisory solutions and services as well as the need amongst the consumers to manage their financial activities. Moreover, presence of numerous affluences in the regions is also anticipated to contribute significantly towards the growth of the global robo advisory market over the coming years.
Additionally, Asia Pacific is anticipated to gain significant market share on the back of rising household wealth amongst the population in the region and growing awareness for robo advisory services amongst the consumers. According to Global Wealth Databook 2019 of the Credit Suisse Research Institute, Asia Pacific constituted the largest share of total household wealth of around 39.16% amongst all other regions in the year 2019. North America had the second largest share followed by Europe with 31.78% and 25.17% respectively.
The global robo advisory market is further classified on the basis of region as follows:
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