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US robo surge has lessons for Australia
US robo surge has lessons for Australia
Growth in the US robo-adviser market has surged over the past three years, revealing the types of clients digital advice may suit as the market matures in Australia.
New research from cryptocurrency information hub Inside Bitcoins revealed that the value of the US robo-advice market had increased almost fourfold from 2017 to 2019, from $191.6 billion to $757.1 billion.
The firm said the market was expected to surpass $1 trillion assets under management this year, and reach $1.5 trillion by 2023.
The firm defined robo-advisers as algorithm-driven systems that were able to set up a portfolio for an investor with “little to no human supervision”, and said such platforms were a good entry point for consumers with small amounts to invest.
“These investing platforms offer easy account set-up, portfolio management, and customer services,” the firm said.
“Furthermore, they require small opening balances, from as little as $10 and charge low fees, around 0.25 percent a year.”
While robo advice systems typically appealed to lower balance, cost-conscious clients, the data showed that over time the assets under management per user had swelled, from almost US$39,000 in 2017 to just over US$99,000 in 2020.
“By the end of 2021, this amount is expected to touch nearly [US]$103,000,” Inside Bitcoins said.
While the growth in robo advice had been led by US-based platforms such as Wealthfront and Betterment, global take-up had also been strong with 70.5 million robo advice users worldwide as of this year.
This represented a fivefold increase in user numbers over the past three years, and user numbers were expected to double by 2023, the firm said.
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