Robo Advisory Market

Global Robo Advisory Market Size (2024 to 2029)

The global robo advisory market is expected to grow at a CAGR of 54.2% from 2024 to 2029, and its size is anticipated to be USD 154.6 billion by 2029, up from USD 17.73 billion in 2024.

Robo-Advisory is essentially an automated algorithm-based portfolio management service offered by wealth management companies. It dramatically reduces administration costs of providing all financial advice through labor, helping wealth management companies to provide this service at minimal cost to their clients. Robo Advisory is an automated portfolio management software that enables clients to systematically adjust and customize online investments to achieve their long-term financial goals and short-term investment strategy.

Current Scenario of the Global Robo Advisory Market

The penetration of technology in the financial industry has been steadily growing over the last few decades, and the same kind of growth has been noticed in the global robo-advisory market. The adoption of robo advisory services has grown exponentially in several countries in recent years. For instance, the usage of robo advisory is high in developed countries such as the U.S., the UK and Australia compared to developing and underdeveloped countries. Robo advisory companies such as Betterment and Wealthfront are popular in the U.S. and have been offering automated investment management solutions to individuals based on their preferences and risk profiles. Similarly, Nutmeg and Moneyfarm in the UK have been offering low-cost portfolio management services to tech-savvy investors. Companies operating in the global robo advisory market worldwide have been leveraging advanced algorithms and ML techniques to offer personalized investment recommendations for their customers. The next few years for the robo advisory market are anticipated to be promising owing to the growing demand for convenient and cost-effective investment solutions.

MARKET DRIVERS

The rapid adoption of digital financial services and increasing demand for customized investment advice are propelling the growth of the robo advisory market worldwide.

Robo advisory is a practical option of an automated process without any manual commitment from financial advisers. Technological advancements have been aiding many industries around the world in transforming digitally. Various market forces are driving organizations to transform digitally, such as the emergence of new ecosystems accessible through digital channels, the reduction of barriers to digital entry, the reduction of ownership of assets and infrastructure, and chains decoupled value, among others. Financial advisory firms embrace technologies such as machine learning and artificial intelligence (AI) to develop financial algorithms that can learn and use knowledge to solve complex problems continually, which, in turn, helps companies gain an additional competitive advantage to serve their clients and improve the provision of advice.

Recent advances in machine learning (ML), artificial intelligence (AI), and neural research promise to revolutionize business models in several industries where there has always been a strong demand for automation of complex processing as activities by humans are prone to errors. Initially used in the financial sector, the need to manage wealth digitally has paved the way for growing demand for robot advisors, who use predefined algorithms to rank consumers for their ability to manage risk and, therefore, offer predefined and low-cost services. It has been observed that the arrival of robot advisers has reduced the cost of wealth management from 1.0% to 2.0% to 0.15% to 0.50% of total assets.

The absolute advantages of robot advisers to allow automatic management of people's wealth based on algorithms are further promoting the global robo adviser market growth.

Several small investors can now use robot advisers to track the progress of their portfolios as they are available at low starting prices, offer attractive returns, and are transparent, surprisingly different, and innovative compared to plans offered by the banking sector. Analysts have observed that the current and future generations in various emerging economies are familiar with technology and prefer digital tools. In addition to this, financial advisory providers are also embracing new technologies as they can help them effectively serve a larger group of clients over time. The robotics advisory market is anticipated to experience a high growth rate due to increased accessibility and accessibility with a low price of financial assistance, and increased internet penetration associated with advanced technology. Increased competition with new entrants and diversified services are among the main factors that should increase the demand for Robo advisers at a high rate in the coming years.

MARKET RESTRAINTS

On the flip side, the shortage of direct contact or personalized support to clients, the escalation of risk profiles due to changing factors such as retirement and income, and the inability to adapt to changes in runtime scenarios are just a few factors that impede the Robo advisers market to reach its true potential.

REPORT COVERAGE

SEGMENTAL ANALYSIS

Global Robo Advisory Market Analysis By Type

The pure robo advisory segment dominated the market in 2023, accounting for 57.4% of the global market share and the domination of the segment is anticipated to continue throughout the forecast period. The growth of the pure robo advisory segment is majorly attributed to cost-effectiveness, accessibility, and convenience. The user-friendly interfaces and algorithm-based investment strategies offered by pure robo advisors is boosting the expansion of the pure robo advisory segment in the global market. Pure robo advisory firms such as Betterment and Wealthfront are popular worldwide and have substantial amount of user base worldwide.

The robo hybrid advice segment is anticipated to account for a substantial share of the worldwide market during the forecast period owing to the increasing integration of automated investment solutions with human advisory services by the financial institutions.

Global Robo Advisory Market Analysis By Service

The wealth management segment held the largest share of the global robo advisory market in 2023 and the lead of the segment is estimated to continue during the forecast period. The democratization of investing and the shift towards passive investment strategies are one of the key factors propelling the growth of the wealth management segment.

The cash management segment is predicted to grow at a healthy CAGR during the forecast period in the global market. Factors such as the rising complexity of cash management operations, the need for real-time liquidity visibility, and the adoption of cloud-based treasury solutions are propelling the growth of the cash management segment in the global market.

REGIONAL ANALYSIS

North America held the largest share of 40.7% of the global market share in 2023, and the lead of the North American region in the global market is likely to continue throughout the forecast period. The dominance of the North American region is primarily attributed to the presence of a robust financial services sector across North America and high awareness and adoption of robo advisory services among the North American population. Factors such as rapid adoption of digital investment solutions, the presence of established robo advisory platforms, favorable regulatory frameworks promoting fintech innovation, the presence of affluent population and growing emphasis on retirement planning across the North American region are further promoting the robo advisory market in this region. The U.S. holds the major share of the North American market, followed by Canada.

Europe is a notable regional segment in the worldwide market and is predicted to capture a substantial share of the worldwide market during the forecast period owing to the increasing consumer awareness of robotic consulting solutions and services, as well as the need for consumers to manage their financial activities. The rising demand for digital wealth management solutions, regulatory support for fintech innovation, and increasing preference for self-directed investing are contributing to the growth of the European market. For instance, regulatory initiatives such as the Markets in Financial Instruments Directive II (MiFID II) and the Sustainable Finance Disclosure Regulation (SFDR) of European Union are driving transparency and sustainability in the European robo advisory market. The rise of open banking and PSD2 regulations and the emergence of digital-first banks and investment firms targeting tech-savvy consumers are further propelling the robo advisory market in Europe.

The Asia Pacific has experienced impressive growth in the robo advisory sector, both in volume and value, and is expected to experience the highest growth rate over the forecast period due to increasing adoption automation by manufacturing industries and adoption of Robo industrial boards across the region. Countries like China, Japan, Thailand, and South Korea produce high-volume commercial and industrial flight boards. The adoption rate of flight advice in China and India is very high due to the massive deployment in the manufacturing sector. Factors such as growing wealth accumulation, increasing middle-class population seeking investment opportunities, rapid penetration of the internet and smartphones, the emergence of digital-native investment platforms, and government initiatives promoting financial inclusion and literacy are promoting the growth of the robo advisory market in the Asia-Pacific region.

KEY PLAYERS IN THE GLOBAL ROBO ADVISORY MARKET

Companies playing a leading role in the global robo-advisory market include Betterment, FutureAdvisor, Personal Capital, Vanguard Personal Advisor, Wealthfront, WiseBanyan, and SigFid Wealth Management.

DETAILED SEGMENTATION OF THE GLOBAL ROBO ADVISORY MARKET INCLUDED IN THIS REPORT

This research report on the global robo advisory market has been segmented and sub-segmented based on type, service, end-user, and region.

By Type

• Pure Robo Advisory

• Robo Hybrid Advice

By Service

• Wealth Management

• Cash Management

By End-User

• Healthcare

• Retail

• Education

• Others

By Region

• North America

• Europe

• Asia-Pacific

• Latin America

• Middle East and Africa