Robo-advice is the new buzzword for the financial technology industry. So what is robo-advice and what impact could it potentially have on the financial industry as a whole? The term could be a bit misleading because it doesn't involve robots per se, it usually involves an online platform that replace the face-to-face meeting and gives you automated advice based on your personal profile and financial situation.
Research from Deloitte suggest that robo-advisors have a bright future - 20% of consumers are aware that there are such a thing as robo-advisory according to the report Robo-Advisors Capitalizing on a growing opportunity. The same study also reports that the 11 leading robo-advisory firms grew their assets under management with 65% from April 2014 to December 2014. And last year The Guardian reported that robo-advice platforms are predicted to reach $489 billion in assets under management by 2020.
A few well known businesses that falls under the definition robo-advice platforms are Acorns, Fiver a Day, Future Advisor, Betterment and Wealth Horizon. These online financial advisors are not targeting people who have large sums to invest, instead they are focusing on attracting people who don't fully understand investing. Their are reaching out to this group by explaining how easy and effortless it is to invest your savings using automated investment services.
We don't know yet what the future holds for the financial advice industry, but what we do know is that we're just in the beginning of this development. We've just seen the tip of the ice berg as Deloitte writes in the report mentioned above.
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