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Feb. 11, 2016
Report: Hybrid Robo-Advisors 2016

Hybrid Robos will Manage 10% of Investable Assets by 2025

Hybrid Robo-Advisors

After the strong growth of the robo-advisory approach in recent years, promoted by numerous start-ups worldwide as well as sizeable number of early adopting wealth managers, a new ‘sub-species’ has emerged: the hybrid robo/personal contact service, which adds a substantial software component to human interaction in the client advisory process. This is a key finding of our report "Hybrid Robos: how combining human and automated wealth advice delivers superior results and gains market share".

In our view, hybrid robo-advisory strategies represent a paradigm shift in the pace and path of change in the wealth management industry. MyPrivateBanking estimates that hybrid robo services will by 2020 grow to a size of USD 3,700 billion assets worldwide; by 2025 the total market size will further increase to USD 16,300 billion. This number constitutes just over 10% of the total investable wealth in 2025. By comparison,“pure” robo-advisors (completely automated without personal service added on) will have a market share of 1.6% of the total global wealth at that stage. The report includes a projection for the market size and growth globally of Hybrid Robo-Advisor and pure play robo-advisor, including a breakdown between North America and the rest of the world, and a split by the retail and affluent wealth and the HNWI/UHNWI segments.

Hybrid robo solutions are a dynamic and also unstable new phase in the wealth management industry’s transformation. We expect 2016 to be a year of significant developments – several major players have announced that they will reveal their hybrid offerings in the course of the year and many more wealth managers are currently working through the issues of hybrid robo adoption. The institutional players entering the robo-advisors markets and their offerings are analyszed in detail in the report.

Hybrid Solutions will impact many financial services sectors

The drivers for hybrid robo innovation will come from several different sources within the global financial industry. For a start there is is the inspiration derived from the original robo-advisor services. To this must be added the new opportunities that have arisen following the launch of a substantial range of new B2B technology providers, some focused only on the banking and wealth management industries and others with a broader scope.

The next 12 to 18 months will provide numerous demonstrations of the impact of the new (white label) technology providers and robo/conventional partnering on wealth management. In particular, as this report’s case studies show, the resulting hybrid wealth management solutions will spring up in a number of different parts of the global finance industry. Furthermore, with the help of robo technology, MyPrivateBanking expects to see a significant increase in quasi-wealth management services from sections of the industry that have been considered as distinct from wealth management, such as pension providers, fund managers and retail banks.

The robo model of investment portfolio management will be good enough in the eyes of a larger proportion of investors than the wealth management industry itself yet seems ready to recognize. Moreover, hybrid robo-advisory services will increase the efficiency of advisors, in terms of numbers of clients served per professional, and the increasing numbers of hybrid solutions will also have a significant downwards effect on the client charges the market will bear.

Wealth managers should implement robo advisors solution fast, but thoughtful

The report highlights 20 different recommendations for consideration by wealth managers in weighing up hybrid robo opportunities, among them:

  • Wealth Managers should be wary of assuming that one or more robo-advisory elements can be just ‘added on’ to an existing service.

  • Especially in the retail and affluent segments, tie-ups with non-financial retail services of various kinds will be of increasing importance for the success of robo-advisory client recruitment.

  • For most wealth managers the path to a hybrid solution will have several stages; this is fine but clients’ awareness of the capabilities of automation will be increasing rapidly in the next few years.

  • In the higher wealth segments, wealth managers who automate ‘behind the scenes’ processes will be best placed to introduce client facing robo elements when they’ve established their client-base is ready.
     

About the report:

The report "Hybrid Robos: how combining human and automated wealth advice delivers superior results and gains market share" analyzes the emergence of hybrid robo-advisors in depth and offers a detailed study of how specific robo-advisor developments can be used in conjunction with personal contact from professionals. It illustrates different types of hybrid robo solutions and offers five case studies of hybrid robo innovators to provide insights into different ‘pathways’ to hybrid solutions. In addition the report makes market projections for hybrid robo growth cover the next nine years and includes a breakdown between North America and the rest of the world and between the retail and affluent wealth segments and the HNWI/UHNWI segments.

For the report, the MyPrivateBanking analyst team covering the robo-advisor phenomenon from its beginning has further researched the leading trends (and providers) and engaged in discussions with service and technology providers as well as industry experts and wealth managers. For more information on the report please click here.

My Private Banking



Report: Hybrid Robo-Advisors 2016

Hybrid Robos will Manage 10% of Investable Assets by 2025

  Feb. 11, 2016

Hybrid Robo-Advisors

After the strong growth of the robo-advisory approach in recent years, promoted by numerous start-ups worldwide as well as sizeable number of early adopting wealth managers, a new ‘sub-species’ has emerged: the hybrid robo/personal contact service, which adds a substantial software component to human interaction in the client advisory process. This is a key finding of our report "Hybrid Robos: how combining human and automated wealth advice delivers superior results and gains market share".

In our view, hybrid robo-advisory strategies represent a paradigm shift in the pace and path of change in the wealth management industry. MyPrivateBanking estimates that hybrid robo services will by 2020 grow to a size of USD 3,700 billion assets worldwide; by 2025 the total market size will further increase to USD 16,300 billion. This number constitutes just over 10% of the total investable wealth in 2025. By comparison,“pure” robo-advisors (completely automated without personal service added on) will have a market share of 1.6% of the total global wealth at that stage. The report includes a projection for the market size and growth globally of Hybrid Robo-Advisor and pure play robo-advisor, including a breakdown between North America and the rest of the world, and a split by the retail and affluent wealth and the HNWI/UHNWI segments.

Hybrid robo solutions are a dynamic and also unstable new phase in the wealth management industry’s transformation. We expect 2016 to be a year of significant developments – several major players have announced that they will reveal their hybrid offerings in the course of the year and many more wealth managers are currently working through the issues of hybrid robo adoption. The institutional players entering the robo-advisors markets and their offerings are analyszed in detail in the report.

Hybrid Solutions will impact many financial services sectors

The drivers for hybrid robo innovation will come from several different sources within the global financial industry. For a start there is is the inspiration derived from the original robo-advisor services. To this must be added the new opportunities that have arisen following the launch of a substantial range of new B2B technology providers, some focused only on the banking and wealth management industries and others with a broader scope.

The next 12 to 18 months will provide numerous demonstrations of the impact of the new (white label) technology providers and robo/conventional partnering on wealth management. In particular, as this report’s case studies show, the resulting hybrid wealth management solutions will spring up in a number of different parts of the global finance industry. Furthermore, with the help of robo technology, MyPrivateBanking expects to see a significant increase in quasi-wealth management services from sections of the industry that have been considered as distinct from wealth management, such as pension providers, fund managers and retail banks.

The robo model of investment portfolio management will be good enough in the eyes of a larger proportion of investors than the wealth management industry itself yet seems ready to recognize. Moreover, hybrid robo-advisory services will increase the efficiency of advisors, in terms of numbers of clients served per professional, and the increasing numbers of hybrid solutions will also have a significant downwards effect on the client charges the market will bear.

Wealth managers should implement robo advisors solution fast, but thoughtful

The report highlights 20 different recommendations for consideration by wealth managers in weighing up hybrid robo opportunities, among them:

  • Wealth Managers should be wary of assuming that one or more robo-advisory elements can be just ‘added on’ to an existing service.

  • Especially in the retail and affluent segments, tie-ups with non-financial retail services of various kinds will be of increasing importance for the success of robo-advisory client recruitment.

  • For most wealth managers the path to a hybrid solution will have several stages; this is fine but clients’ awareness of the capabilities of automation will be increasing rapidly in the next few years.

  • In the higher wealth segments, wealth managers who automate ‘behind the scenes’ processes will be best placed to introduce client facing robo elements when they’ve established their client-base is ready.
     

About the report:

The report "Hybrid Robos: how combining human and automated wealth advice delivers superior results and gains market share" analyzes the emergence of hybrid robo-advisors in depth and offers a detailed study of how specific robo-advisor developments can be used in conjunction with personal contact from professionals. It illustrates different types of hybrid robo solutions and offers five case studies of hybrid robo innovators to provide insights into different ‘pathways’ to hybrid solutions. In addition the report makes market projections for hybrid robo growth cover the next nine years and includes a breakdown between North America and the rest of the world and between the retail and affluent wealth segments and the HNWI/UHNWI segments.

For the report, the MyPrivateBanking analyst team covering the robo-advisor phenomenon from its beginning has further researched the leading trends (and providers) and engaged in discussions with service and technology providers as well as industry experts and wealth managers. For more information on the report please click here.

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