Fully-automated Roboadvisors Will Manage Nearly $1 Trillion Assets by 2022

New data from Juniper Research has found that roboadvisors (digital wealth management platforms) under full control of AI systems will reach $987 billion per annum in AUM (assets under management) by 2022.

These fully-automated roboadvisors will represent approximately 25% of total roboadvisor AUM in 2022, and their growth will outpace other semi-automated, supervised deployment types with lesser reliance on AI, by some margin. These roboadvisors are forecast to grow their AUM at close to 155% per annum on average versus 69% growth for the overall market according to Juniper.

Juniper’s new research found that consumer trust would play a fundamental role in shaping the market during the projection period. For this reason, Juniper predicted that ‘hybrid’ roboadvisors would dominate the market, managing 66% of global roboadvisory AUM in 2022. It noted that human advisor input plays a key role here, serving to allay consumers’ fears of handing management of their cash over to an algorithm.

Nevertheless, the research predicted that while key market forces, such as economic uncertainty and increasing awareness of services would drive the overall market, changing demographics would kickstart demand for fully-automated roboadvisors. Meanwhile, the research predicted that market consolidation was highly likely in the near-term, particularly in more mature roboadvisory markets, such as the US.

It argued that strong competition and high customer acquisition costs meant that many services would be unable to reach the AUM ‘tipping point’ necessary to generate profits. Juniper noted this would impact semi-automated roboadvisory services the most, owing to their reliance on human advisors and relatively low AUMs. It argued that for these reasons, many service providers would make themselves a target for acquisition.