The Robo Advice: Revolution or Evolution? report provides strategists, marketers and senior managers with the critical information they need to assess the rapidly developing for automated investment and financial advice. Robo advice is one of the most important trends in the market, and this report gives a comprehensive assessment of the based on discussions with all the leading players globally. Description The Automated Financial Advice report covers all the vital information and analysis required to help you enter into or expand in the robo advice market. It is broken into the following sections: The Executive Summary gives the key take-aways from the report The ‘What is Robo Advice’ section looks at what defines a robo advice offering, the difference between automated financial advice and automated investment management, and why robo advice is gaining so much media and investment interest. The ‘Emerging Business Models’ section looks at different approaches being taken by players, the challenges and opportunities they face and suggests some of the short, medium and long term scenario for this growing market. The ‘What Will the Winners Look Like?’ chapter gives advice on the key success factors in the market, including segmentation, differentiation, customer centricity, gamification and stimulus, virtualisation, and big data. The ‘Size and Growth of the Global Market’ section looks at the size of the market, its explosive potential and the drivers behind this. The USA, UK and Australia market chapters look at how at the leading robo advice markets, how they developed, and the unique competitive and regulatory landscape in each geography. The Appendix includes profiles of a large number of robo advice companies, including an overview of each company and its offering, its market positioning, developments and the customer journey it offers. Scope Markets Covered: robo advice, automated financial planning, financial advice, brokerage, fund platforms Companies profiled: Betterment, Financial Guard, FutureAdvisor (a BlackRock Company), Intelligent Portfolios from Charles Schwab, Inc., LearnVest Inc., Personal Capital, SigFig Wealth Management LLC, Vanguard PAS, Wealthfront, Inc, WiseBanyan, Inc, Easy Folio, eValue (Investment Solutions), Fintego Managed Depot, Ginmon GmbH, Marie Quantier, MoneyFarm, Nutmeg Savings & Investment Limited, Parmenion (Aberdeen Asset Management), Quirion (Quirin Bank AG), Scalable Capital, True Wealth Inc., vaamo Finanz AG, Wealthify, Wealth Objects Limited, Wealth Wizards, Yomoni, Clover.com.au, Decimal Software Ltd, Ignition Wealth (Ignition Direct), QuietGrowth, Stockspot. Geographies: Australia, Europe, UK, USA. Time series: Current and five years forecast assets under management. Infographics: fifty high-quality conceptual and data driven illustrations. Analysis: Definitions and segmentations, business models, success factor analysis, market drivers, market background, competitive and regulatory characteristics. Company positioning, developments and workflow analysis. Research: The report is based on 25+ interviews with many of the leading players in the global robo advice market. It draws on exhaustive secondary research. Authors: The report’s authors draw on over 60 years of collective senior research experience in the financial and technology sectors. Reasons to Purchase The Report • Develop strategies based on what robo advice is and what it means in today’s market. • Choose your approach to the market based on the industry’s emerging business models. • Plan innovative strategies based on the ‘What Will The Winners Look Like’ section. • Facilitate decision making on the basis of forecast market data. • Benchmark performance against key competitors by understanding their market positioning, offerings, portfolios and workflows. • Identify investment opportunities. • Target your key markets with detailed market, competitive, regulatory and trend information for the US, UK and European, and Australian markets. • The report supports your internal and external presentations with reliable high quality data, analysis and 50 attractive and informative graphics.
Table Of Content EXECUTIVE SUMMARY Robo advice is not a new concept, but is gaining a lot of global attention There are far fewer pure robos than the media would have us believe Focus is on automated investment management; there are very few automated advice propositions Early movers built from scratch, but start-ups are now seeking to build partnerships with established players Low cost automated investments will become the core building block of financial planning Many of the ‘me too’ automated investment propositions will fall by the wayside unless they continue to develop The market for automated investment management services will grow significantly, but hybrids will be the dominant model The addressable market for virtual advice is huge, but very few propositions have come forward to meet this demand WHAT IS ROBO ADVICE? Robo advice: a catch all term for remotely delivered wealth management Defining ‘robo advice’ Automated investment management solutions are the dominant model; but how automated are they? There are only a handful of automated financial planning propositions in the market today Why is ‘robo advice’ under the spotlight? Propositions are only as good as the algorithms EMERGING BUSINESS MODELS Pure play start-ups have led the charge to date The cost of acquisition is the elephant in the room for start-ups Re-focus on the B2B market to drive profitability Industry stalwarts are now seeing the potential of automation; and have important strategic advantages over the start-ups Which play will the current incumbents make – build, partner, or buy? In the B2B space, robo for advisers is nothing new, but some are now embracing the opportunity to expand the reach of their business Robo advice will place widespread pressure on margins and fees The impact on the advice market will take longer to play out, and will result in advisers ultimately moving up the advice value chain WHAT WILL THE WINNERS LOOK LIKE? Many of the ‘me too’ automated investment propositions will fall by the wayside unless they continue to develop Automated investment propositions will need get much better at targeting clearly defined, profitable consumer segments Differentiation needs to be on a feature that the mass market consumer can understand A truly customer-centric approach will be required to shift customers from a transactional to an ongoing relationship Winning propositions will make better use of behavioural economics to enhance the user experience and increase conversion and retention rates Winning propositions will need to engage consumers in new ways, using visual stimulus to create emotional responses Gamification can ‘reward’ consumers for building knowledge; virtual reality can allow them to test drive future outcomes in a safe environment Winning solutions will blend the human touch with automation Next generation ‘cyborgs’ will shift the boundary between human and robot within five years – think ‘virtual advice’ New revenue models to reflect what consumers are actually paying for? Big data, data giants and analytics: The final frontier Robo 3.0 has the potential to do so much more than personal finance SIZE AND GROWTH OF THE GLOBAL MARKET Robo advice growth is about to take off Drivers for global growth Robo advisors are everywhere, but the US still dominates the global landscape The US still presents the best market opportunity and will continue to drive global growth Global forecasts for robo advice COUNTRY PROFILE: USA Introduction Market Background and Development History Market Size and Growth Competitive Landscape Regulatory Environment Future Prospects COUNTRY PROFILE: UK Introduction Market Background and Development History Market Size and Growth Competitive Landscape Regulatory Framework Future Prospects COUNTRY PROFILE: AUSTRALIA Introduction Market Background and Development Market Size and Growth Competitive Landscape Regulatory Environment Future Developments APPENDIX: US COMPANY PROFILES Betterment Financial Guard FutureAdvisor (a BlackRock Company) Intelligent Portfolios from Charles Schwab, Inc. LearnVest Inc. Personal Capital SigFig Wealth Management LLC Vanguard PAS Wealthfront, Inc. WiseBanyan, Inc. APPENDIX: UK AND EUROPEAN COMPANY PROFILES Easy Folio eValue (Investment Solutions) Fintego Managed Depot Ginmon GmbH Marie Quantier MoneyFarm Nutmeg Savings & Investment Limited Parmenion (Aberdeen Asset Management) Quirion (Quirin Bank AG) Scalable Capital True Wealth Inc. vaamo Finanz AG Wealthify Wealth Objects Limited Wealth Wizards Yomoni APPENDIX: AUSTRALIAN COMPANY PROFILES Clover.com.au Decimal Software Ltd Ignition Wealth (Ignition Direct) QuietGrowth Stockspot
List Of Figures Figure 1: True robo solutions provide a recommendation based on personal information the customer has provided 25 Figure 2: Automated investment management solutions today rarely deliver an end-to-end automated solutions across the entire advice value chain 26 Figure 3: Robo advice solutions today are only scratching the surface of meeting consumers’ financial needs 31 Figure 4: Robo advice: disruptor, enabler or market maker 32 Figure 5: Understanding the customer: a comparison of the questionnaires used by some of the leading automated investment management solutions 36 Figure 6: Understanding the customer: A sample of typical questions asked 36 Figure 7: Comparing asset allocations for a moderate risk profile for selected automated investment managers 37 Figure 8: Robo entrepreneurs with a technology or investment banking background 39 Figure 9: From B2C Disruptors to B2B2C Enablers 42 Figure 10: Robo 1.0 to Robo 2.0 43 Figure 11: Examples of build, buy, or partner models 46 Figure 12: Australian technology provider Decimal Software provides a white labelled solution to financial institutions 52 Figure 13: The UK’s Money on Toast has switched from an automated investment management proposition to providing a low cost remote advice service 57 Figure 14: Average AUM per client for selected robo advisors 61 Figure 15: New ways of communicating with consumers are needed: Bloom in the US 65 Figure 16: Behavioural biases that are inherent in pension decumulation decision making 69 Figure 17: Robo advice of the future: shifting from push to pull 76 Figure 18: Robo Advice 3.0 77 Figure 19: Robo advisors of the future may bring together families and other groups, and offers these groups solutions that span multiple aspects of their life 79 Figure 20: The Six D’s of Exponential Technology 80 Figure 21: Drivers for the development of the robo advice market 81 Figure 22: Online population by age and geography 82 Figure 23: Assets under management by geography 83 Figure 24: Example robo advice proposition by geography 85 Figure 25: Market Opportunity Map 87 Figure 26: A number of robo advisors in the US has climbed rapidly since 2011: Examples of recent robo advisor launches in the US 92 Figure 27: Many robo advisors in the US are hybrids, with elements of their processes being assisted by a human. Some have human advisors on hand to assist customers 93 Figure 28: Preference for human, automated vs. hybrid advice amongst US consumers 94 Figure 29: Assets under management of the leading robo advisors in the US, $bn 96 Figure 30: Robo advice awareness and usage by age in the US, 2015 98 Figure 31: US households by assets (excluding primary residence) in 2015, thousands 99 Figure 32: Examples of US robo advisors by distribution channel 100 Figure 33: Level of automation across the advice value for selected US robo advisors 102 Figure 34: A comparison of the prices charged by selected US robo advisors 103 Figure 35: A comparison of features provided by selected US robo advisors 105 Figure 36: Type of financial advisor experience US investors want 108 Figure 37: Increase in assets under management for the three largest robo start-ups in the US, compared to the next nine largest start-ups, May 2015 to March 2016 109 Figure 38: A number of robo advice propositions have come to market in 2016 114 Figure 39: UK robo advisors by distribution channel 121 Figure 40: Many robo advisors in the UK are hybrids, with elements of their processes being assisted by a human. Some have human advisors on hand to assist customers 122 Figure 41: UK robo advisors by level of automation across the advice value chain 123 Figure 42: A comparison of the prices charged by selected UK automated investment management propositions 124 Figure 43: Comparative performance of property over a 10 and 20 year time horizon 130 Figure 44: Stockspot’s suitability warning messages 132 Figure 45: A number of robo advice propositions have come to market recently 133 Figure 46: Household assets by category, A$bn, 2016 135 Figure 47: Australian robo advisors by level of advice and level of automation 137 Figure 48: QuietGrowth undercut Stockspot for all account sizes upon entry 139 Figure 49: Fee structures for selected Australian robo advisors 139 Figure 50: Map My Plan pricing and proposition (May My Plan website, June 2016) 142
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