Low cost automated investment advice, a.k.a. robo advice, has the potential to become the core of financial planning service and have $19.5 trillion in assets under management (AUM), found a report the financial services company Ignition House and The Business Research Company.
The document, entitled “Robo Advice: Revolution or Evolution?”, argues that many consumers and institutions will want to move to automated options and AUM will grow, seeking lower cost of investment advice. According to the study, the move will initially be driven mainly from corporate level and institutional robo offerings and later by consumer focused service.
The report has found that the current robo advice market is dominated by the USA with an estimated $1.2 trillion under management. This is driven mostly by the favorable regulatory environment, the large size of the retirement savings market and the propensity to save in equities and makes the US the most promising market for robo advice services.
India and China, on the other hand, present long term opportunities but are more traditionally inclined towards property, gold and money market fund investments. As for Europe, the UK looks set for growth thanks to the availability of major pension funds and a positive environment for fintech companies.
“The robo advice market is set for explosive growth, and we at Ignition House are excited to be the go-to authority tracking its development” commented Janette Weir, one of the report’s authors.
The report is much in line with a sturdy of the digital, technologies and operations consultant Accenture “The Rise of Robo Advice”, which notes that competition, innovation and new technology will dramatically increase robo advice capabilities in the near future.
Accenture anticipates that in the next decade and beyond, emerging technologies such as cognitive computing will power major advances in robo advice capabilities, far from its current moderate capabilities of profiling clients and assessing their basic investment needs. It is expected that the service will evolve towards an automated advisor assistant that can provide complex advice and will allow the client to interact with the assistant on a regular basis.
The advance of robo advisors, however, will not send the human investment advisors in oblivion, but will rather improve the services provided by the investment companies.
Robo advice and automated trading is nothing new to the forex trading industry either. One of the most popular automated trading forex brokerages is RoboForex. There are also companies like Tradency, which recently launched its latest product – RoboX, which adapts in accordance with the user’s preferences, using smart combinations of the strategies and trading signals passing through Tradency’s platform. Shortly afterward RoboX got adopted by the New Zealand forex broker Fullerton Markets and the Malta-regulated FXDD Global.