Robo Advisory Market Size, Share & Trends Analysis Report By Type (Pure Robo Advisors, Hybrid Robo Advisors), By Provider, By Service Type, By End-use, By Region, And Segment Forecasts, 2022 - 2030

Report Overview

The global robo advisory market size was valued at USD 4.13 billion in 2021 and is expected to grow at a compound annual growth rate (CAGR) of 29.7% from 2022 to 2030. The widespread digitalization in the financial sector is expected to drive the demand for robo advisors as it enables users with tech-enabled analytics offered by robo advisors for investment consultations. Furthermore, a rapid shift from traditional investment services to robo advisory investment services is another factor in market growth. In addition, investment platforms are now offering robo-advisors as new digital financial advisors over traditional investment services, enabling the scope of expansion for robo advisors.

The widespread use of robo advisory throughout industrial verticals such as retail banking, asset management, and others for conducting algorithmic calculations to analyze data and transmit comprehensive information driving the market forward. Moreover, robo advisors offer specific benefits such as tax-loss harvesting, low-cost portfolio, better decision-making, safe and secure investments, and help eliminate credit risks. Such factors are anticipated to drive the industry growth over the forecast period. 

The growing technological advancements such as artificial intelligence (AI) and machine learning (ML) are also emerging as one of the major factors driving the market's growth. Moreover, the growing adoption of AI and ML in investment platforms is one of the major robo advisor trends. For instance, in February 2022, Kenanga IB, a Malaysian financial services firm, announced the launch of Kenanga Digital Investing (KDI). This digital investing platform is driven by the market's latest fully automated Artificial Intelligence (AI) robo-advisor, which aims to simplify financial decisions. Furthermore, such technological advancements aid in reducing the number of errors caused due to human intervention, hence amplifying business financials, which is boding well for market growth.

Moreover, governments are encouraging smaller vendors to enter the market with innovative products in various economies. For instance, in May 2020, United Overseas Bank Asset Management Ltd. (UOBAM) announced the launch of robo advisory services, UOBAM Invest, providing personalized investment portfolios online to assist companies in meeting their investment goals. UOBAM Invest will be available to corporate investors with a minimum investment of USD 0.115 million. Such initiatives are uplifting the use of robo advisors, thereby positively contributing to the industry growth.

The limited flexibility offered by robo advisors is anticipated to restrain the market's growth during the forecast period. In addition, the lack of face-to-face meetings leading to consultation barriers between investors and advisors is also expected to hinder market growth. However, the demand for low-cost investment advisory is anticipated to open up opportunities for market growth. Furthermore, the growing usage of advanced analytics and big data can potentially broaden the scope of robo advisors significantly.

COVID-19 Impact Analysis

The COVID-19 pandemic is anticipated to significantly drive the market's growth during the forecast period. The pandemic has boosted the global demand for digital financing, robo advisors, financial planning solutions services, and investment management. Several businesses have reported increased digital investing activity in the first quarter of 2020. For instance, in April 2020, Interactive Investor, a U.K.-based broker firm, reported a 119% increase in the number of individual savings accounts opened on its platform compared to the previous year.

Type Insights

The hybrid robo advisors segment dominated the market in 2021 and accounted for more than 64.0%. The demand for hybrid robo advisors is growing as they combine the efficiency and stability of robotic algorithms with the human factor of a personal financial advisor, which is anticipated to drive the segment growth. In addition, hybrid robo advisors provide additional peace of mind by providing customers with access to a live person-to-person interaction to discuss their investments. For instance, in July 2019, Voya Financial, an investment firm based in the U.S., launched a hybrid robo-advisory platform to assist its advisors in becoming more effective and providing better communication with the broker-dealer.

The pure robo advisors’ segment is anticipated to witness significant growth during the forecast period. The growing consumer preference for robo advisory globally is expected to drive the demand for pure robo advisors, contributing significantly to the segment growth. In addition, pure robo advisors offer security features, engaging customer service, extensive education, and low consultation fees. Such factors have led to an upsurge in using pure robo advisors.

Provider Insights

The fintech robo advisors segment dominated the market in 2021 and accounted for more than 45.0%. Fintechs all over the world relies on both automation and personalization-based advisory. In addition, fintech firms rapidly deploy robo advisors by adopting advanced technologies such as advanced analytics and quantitative finance. This deployment will provide accurate and reliable advisory services to retail investors, preventing them from making poor investment decisions.

The banks segment is expected to register the fastest growth during the forecast period. Banks are constantly attempting to digitalize their offerings and improve the customer experience. Small banks, in particular, are opting for digitalized services for opening a bank account, fueling the demand for chat-based robo advisory. Such enhancements are being implemented across banking sectors to gain leverage and enhance competitive position in the market, which are expected to drive segment growth.

Services Type Insights

The direct plan-based/goal-based segment dominated the market in 2021 and accounted for a share of more than 68.0%. Investors value the features such as solid goal planning, portfolio management, security features, and attentive customer service in a robo-advisor. Customers can run scenarios on goal planning and be prompted to take actions that will increase their chances of success by using goal-based robo-advisors, which provide risk profiling and goal-based suggestions. The development of new goal-setting platforms that include a variety of goal-setting alternatives, free digital financial planning tools, and powerful progress trackers integrated across the platform is anticipated to accelerate the segment's growth.

The comprehensive wealth advisory is anticipated to grow at a promising CAGR during the forecast period. These advisers provide complete wealth management services by compiling their clients' financial net worth and comprehending their risk tolerance. In addition to fund-based portfolio recommendations, they provide financial planning, portfolio management services, and financial consulting for wealth and estate planning. This, together with the expansion of financial advising services available for the less wealthy population, is anticipated to fuel segment growth.

End User Insights

The High Net Worth Individuals (HNWIs) segment dominated the market in 2021 and accounted for a share of more than 58.0%. The growing demand for HNWIs by private equity managers to safeguard their investments is anticipated to drive the segment growth. Moreover, HNWIs frequently seek the advice of investment advisors to manage their wealth properly. In addition, the U.S. has accounted for the most HNWIs, with over 7.4 million people, per World Wealth Report 2022.

The rapid growth of financial inclusion due to pandemics is among the significant factors expected to drive the segment's growth. The rapid increase in trading account creation reflects the sustained surge in the prevalence of retail investors during the lockdowns. For instance, in February 2021, a Financial Industry Regulatory Authority (FINRA) survey reported that 38% of retail investors were involved in creating more than one investment account.

Regional Insights

North America dominated the market in 2021 and accounted for over 29.0%. The presence of several prominent players, such as Betterment., the Vanguard Group, Inc., and others, is expected to boost the growth of the US robo advisory market. For instance, in September 2019, The Vanguard Group, Inc. announced the service launch for robo-advice. According to the company, with this launch, the service is intended to eliminate human intervention, thereby minimizing errors and performing quick calculations.

The Asia Pacific is anticipated to grow significantly during the forecast period. The regional market development can be attributed to the growing awareness among consumers of the benefits of using automated financial assistance for savings and investments. The efforts being opted by several firms across the Asia Pacific to promote the use of robo advisory are also expected to contribute to the regional growth. For instance, in July 2022, TradeSmart, one of India's leading new-age online discount brokerage firms, announced its partnership with Modern Algos to offer advisory services powered by AI. This platform is equipped with AI to provide users with an efficient order management system. It employs in-depth insights based on algorithms ensuring they have the suitable customized advisory based on their age, investment, and future goals.

Key Companies & Market Share Insights

The market can be described as a highly competitive characterized by various major players. Market leaders focus on growth strategies such as collaborations, mergers, and acquisitions to further expand their global market presence. For instance, in December 2019, Ant Financial Services and Vanguard Group, Inc. collaborated to a better position in the market landscape. This collaboration has enabled Vanguard Group, Inc. to provide simplistic investment advisory and wealth management services to retail customers in China.

Furthermore, key market players constantly focus on innovative product launches to capture a good market share. For instance, in February 2021, In the Marcus push, The Goldman Sachs Group, Inc. announced the launch of a digital investment platform. This platform will focus on allocating and rebalancing customers’ wealth across stock and bond portfolios. Some of the prominent players in the robo advisory market are:

• Betterment

• Fincite GmbH

• Wealthfront Corporation.

• The Vanguard Group, Inc.

• Charles Schwab & Co., Inc.

• Ellevest

• Ginmon Vermögensverwaltung GmbH

• Wealthify Limited

• Social Finance, Inc.

• SigFig Wealth Management

Robo Advisory Market Report Scope

Global Robo Advisory Market Segmentation

The report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2030. For the purpose of this study, Grand View Research has segmented the global robo advisorymarket report based on type, provider, service type, end user, and region: 

• Type Outlook (Revenue, USD Million, 2017 - 2030)

  • Pure Robo Advisors

  • Hybrid Robo Advisors

• Provider Outlook (Revenue, USD Million, 2017 - 2030)

  • Fintech Robo Advisors

  • Banks

  • Traditional Wealth Managers

  • Others

• Service Type Outlook (Revenue, USD Million, 2017 - 2030)

  • Direct Plan-based/Goal-based

  • Comprehensive Wealth Advisory

• End User Outlook (Revenue, USD Million, 2017 - 2030)

  • Retail Investor

  • High Net Worth Individuals

• Regional Outlook (Revenue, USD Million, 2017 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • Germany

    • U.K.

  • Asia Pacific

    • China

    • India

    • Japan

  • Latin America

    • Brazil

  • Middle East & Africa