Coronavirus – Accelerating the inevitable: Why Robo-Advisory is Now a Wealth Management Staple. The pace of technology has meant a rapid evolution in the wealth management space. Although the first robo-advisor was launched only 12 years ago, it has quickly gained traction with the modern consumer, who now sees it as a staple wealth management offering. Today, customers expect even traditional wealth managers to offer robo-advisory services. Those that don’t may be regarded as outdated and unable to keep up with the times. Driven by both the benefits traditional players obtain from integrating robo-advisory services as well as the expectations of the modern consumer, robo-advisory services have shifted from a ‘nice to have’ to a ‘must have’.
A Picture of Growth
According to Statista’s estimates , assets under management (AUM) in the robo-advisor segment have reached US$1.44 trillion in 2020 and are expected to reach US$2.55 trillion by 2023—equating to a compound annual growth rate of 21%—with a projected 147 million users by that date. In the USA alone, robo-advisors’ AUM has already surpassed the trillion-dollar mark.
This trend is not expected to slow down, driven by the younger millennial and Gen-Z generations. They already comprise 63.5% of the global population and have significant adoption rates of robo-advisors.
Understanding your Consumers’ Demand for Robo-Advisors
Bringing it closer to home, we take a look at the volatility in Q1 of 2020 and compared it to the retail consumer’s interest in robo-advisors. From January to March 2020, due to the outbreak of the Covid-19 virus, the VIX index spiked and markets around the world were thrown into turmoil, impacting the SPX as it dropped by more than 20%. Using web traffic and app downloads as a proxy for consumer interest, we looked into the analytics of the various robo-advisors’ in America.
From the research, we see an upward trendline in four out of the top five robo-advisor web traffic. Even as the SPX peaked on 19th February and plunged thereafter, we still see continual interest from consumers as traffic for robo-advisors increases by an average of 2.1% MoM amidst the volatility.
Delving deeper into the consumer behavior journey, we see the aggregated number of robo-advisors’ app downloads went up by 21.8% from February to March 2020 alone. Contrary to the performance of the stock market, the intent to invest by retail investors actually surged. This demand for automated investment platforms aligns with the upwards trend of adoption rates for robo-advisory regardless of how the VIX performs. Consolidating all the data presented thus far, the evidence suggest that now may be the opportune time for investment advisors and wealth managers to capitalize on the rocket ship named robo-advisory. Bambu is a global leader in B2B digital wealth technology. Headquartered in Singapore, Bambu has offices in HongKong, Johannesburg, London, New York, and San Francisco. Leading financial institutions around the world including HSBC, Standard Chartered Bank and Refinitiv, have adopted Bambu’s technology, making wealth management digital and simple. Whether you're launching a Robo-advisor for millennials or a tool for your financial advisors, Bambu's intelligent APIs and SaaS platforms deliver the best possible experience for your users. For further information visit:
Nick Wood | Senior Representative | Bambu