Note from the Publisher: In a new report from research firm Corporate Insight, it was revealed that the three leading startups in the robo-advisory space hold just shy of 20% of the assets gathered to date. The majority of robo-advisory AUM lies with Vanguard Personal Advisor Services and Schwab Intelligent Portfolios and they hold a whopping 75% of assets in the category, which we found astonishing. It seems that in every industry, it can be perilous to be the first in, as once you’ve established proof-of-concept, the big boys then fall in behind you and sweep up the spoils. It looks like that’s exactly what has happened in the robo category, yes? As has been oft predicted here a FintekNews and elsewhere, there will no doubt be a MAJOR shakeout of robos in the coming months/years, as many have flawed business models that require hundreds of dollars for customer acquisition without profits to match, and simply rely on VC speculation to continue functioning.
“Incumbent firms have embraced digital advice and are driving considerable growth and consolidation in the market, according to Corporate Insight’s new study on the robo advice market. Next-Generation Investing: The Incumbents Arrive explores key trends and opportunities in this space and assesses the automated investing and advice services offered by the industry’s leading incumbent firms, as well as 22 investing- and personal finance-related startups. The report also analyzes how today’s digital advice users differ from other investors, drawing on proprietary survey data.
Today, the top 16 digital managed account providers hold $67.5 billion in assets, a 110% increase since July 2015. The three leading startups in this space – Betterment, Personal Capital and Wealthfront – account for $13.4 billion of that total, while Vanguard Personal Advisor Services and Schwab Intelligent Portfolios now hold $51.2 billion. The remaining $2.9 billion is divided among such startups as Blooom, FutureAdvisor and SigFig, as well as incumbent firms E*TRADE and TradeKing.
‘Brokerages and asset management firms have finally embraced the digital advice opportunity, with hybrid firms leading the charge,’ said Sean McDermott, senior analyst at Corporate Insight. ‘After spending years watching from the sidelines, incumbents are responding with their own low-cost, entry-level service offerings to broaden their customer base and protect market share.'”