To what extent will a “robo adviser” replace your financial adviser?

Article

To what extent will a “robo adviser” replace your financial adviser?

Executive Summary

The wealth management industry has been subject to increasing pressure over the past few years, with an uncertain economic outlook, low-rate environment, and rising regulatory requirements. While compliance costs are raising the bar for new entrants, technological breakthroughs are simultaneously lowering these and enabling market disruption.

The fastest growing segment of the wealth management industry is now online and referred to as “robo advisory services”. The assets under management (AUM) of this segment are expected to grow by 2,500 percent by 2020 to reach a potential market value of US$489 billion(1).

The “robo adviser” buzzword is promising disruption in the wealth management industry, especially as the leading eleven pure robo advisers have seen explosive growth since market entry. They further increased their total AUM by 11 percent over the first six months of 2015 (to a total of US$21 billion) after growth of around 65 percent during the previous eight months leading up to the end of 2014(2). Even if these new market entrants are still nascent and represent a negligible amount relative to the US$25+ trillion retail investable assets in the United States(3), the top five robo advisory market actors in the United States already represent US$34 billion AUM in early 2016(4).

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Inside magazine issue 12, June 2016

Inside is Deloitte’s quarterly magazine offering an exclusive insight into best practices, trends and opportunities faced by our clients across all industries.

Inside focuses on the main hot topics relevant for the market (Asset management, Banking, Insurance, Public sector, Healthcare, Private equity, Real estate, TMT, Manufacturing and consumer business, Transport and logistics).

PDF - 16.2 MB
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