The digital channels of wealth management that use AI to help craft asset allocation, among other details, has much further room for growth, according to a new report.
The market for so-called “robo-advisor” wealth management is slated to reach $6.2 trillion by 2027, up from $2.6 trillion in 2020, clocking up a compound annual growth rate of 13.5 per cent and highlighting demand for such tech-driven channels, a study says.
The US market accounted for more than 29.5 per cent of global market size in 2020. Meanwhile, China is expected to grow at a 13 per cent CAGR for 2020 and 2027, the report, published on ResearchAndMarketsx.com, said. The robo-advisory market in the US stood at an estimated $757.5 billion in 2020, the report said.
Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at 11.9 per cent and 11.5 per cent respectively over the 2020-2027 period. Within Europe, Germany is forecast to grow at around 9.9 per cent CAGR while Rest of European market (as defined in the study) will reach $1.1 Trillion by the year 2027.
The figures show how these digital platforms are expected to win important business in the retail, mass-affluent and high net worth space. Firms in the area include Betterment, FutureAdvisor, SigFig Wealth Management, WealthFront and WiseBanyan.
A number of commentaries say that globally, the digital market, sometimes called “robo-advisory,” will manage trillions of dollars in assets in coming years. One report from last year (Daily Fintech, 16 June) said that total AuM was just under $1.0 trillion and could reach $2.4 trillion in under five years from now, given a compound annual growth rate of 26 per cent). Digital platforms have often targeted the mass-affluent rather than the HNW and ultra-HNW end of the spectrum, although the lines blur. A report by Boston Consulting Group issued last year said that the mass-affluent market should be tapped as a new source of growth. In Asia, Ant Fortune, part of Ant Financial, has taken aim at this space; in the US, Betterment and Wealthfront are important players.
This news service recently interviewed the CEO of StashAway, a digital wealth management business based out of Singapore.