Around 200 robo-advice firms in the US now manage approximately $19bn in assets. The UK market is small in comparison but is rapidly expanding. Robo-advice is very low cost compared to human advisors, this will put pressure on professionals to demonstrate how their services are of value and how they justify the higher fees. This will provide more competition in the market, which can only be a good thing. However, robo-advisors do have their limitations, they cannot asses risk as effectively as a human can. Robo-advisors also fail to spot black swan events and market movements associated with illogical behaviour, meaning money could be lost. According to AT Kearney predictions, robo-advisors in the US market could be $2.2tn by the next 5 to 10 years. Citi also suggests that the global market could be up to $5tn in the end of 2020.
Around 200 robo-advice firms in the US now manage approximately $19bn in assets. The UK market is small in comparison but is rapidly expanding. Robo-advice is very low cost compared to human advisors, this will put pressure on professionals to demonstrate how their services are of value and how they justify the higher fees. This will provide more competition in the market, which can only be a good thing. However, robo-advisors do have their limitations, they cannot asses risk as effectively as a human can. Robo-advisors also fail to spot black swan events and market movements associated with illogical behaviour, meaning money could be lost. According to AT Kearney predictions, robo-advisors in the US market could be $2.2tn by the end of 2020. Citi also suggests that the global market could be up to $5tn in the next 5 to 10 years.