Robo advisors are neither going away, nor are they dying off.
Instead, they will get much stronger, expected to collectively top $1 trillion in assets under management in fewer than five years.
The booming popularity of micro-investing firms will partly feed such growth. With over 60% of millennials already subscribed to apps like Acorns, the sector will expand as they devote more money to investing, reports Boston-based consulting firm Aite Group.
“Digital advising will become less focused on Generation Y and begin to resemble the traditional investor,” says Javier Paz, a senior analyst with Aite and the author of “U.S. Digital Advice,” a study released in September.
Robos will become the norm within a decade, he suggests, joined by virtual assistants like Amazon’s Alexa and Apple’s Siri, as comfort with automated investing increases.
The research estimates AUM from robo advisors will hit the $1 trillion milestone by 2020 and will rise to $1.5 trillion the following year. Taking a conservative approach, the research did not account for AUM on upcoming digital platforms by Morgan Stanley, Wells Fargo, and UBS expected later in 2017.
“We’re being bombarded with digitization,” Paz says. “This is just one more form.”
The firm conducted a year-long study that wrapped up in July. As part of their research Aite interviewed industry executives from some of the industry’s largest firms and analyzed public filings. (The study projected its 2017 data).
Click through the slideshow to see how mobile-first investing will change the investment landscape in the coming years.