US providers continue to lead the way: Robo-advice Report


Recep Peker

Global research house Investment Trends has released its latest Robo-advice Report, an in-depth study of the adoption and appetite for automated investment services.

The study is based on a large-scale survey of almost 20,000 online investors across Australia, the USA, the UK, Spain, Germany, France, Singapore and Hong Kong.

Key highlights:

  • US providers continue to lead the way
  • There is strong latent demand for robo-advice among women investors
  • Micro-savings has widespread popularity in Australia, but competition is arriving

US providers continue to lead the way

The latest Investment Trends research shows that the USA continues to lead in adoption of robo-advice across the globe. Close to a quarter of active online investors in the USA (23%) use robo-advice services in some shape or form – significantly higher than countries like the UK (13%), Singapore (9%) or Australia (7%).

“The US robo-advice market leads in adoption levels and range of offerings. But US robo-advice providers have not stood still as they continue refining their offerings – specialist fintech providers are getting better at being banks, while the established wealth brands are getting better at becoming fintech firms,” said Recep Peker, Research Director at Investment Trends.

“Powerhouses like Vanguard, Schwab, E*TRADE, and Fidelity already have well established in-house automated investment services, but continue to compete intensely on price and mobile platform improvements, while fintechs like Betterment, Wealthfront and Stash are intent on being a one-stop-shop for investors’ savings, investing and transacting needs.”

“While collective primary online investor relationships in the US market are evenly split between the established wealth brands and fintechs, the common recipe for success among all successful robo-advice providers is their ability to deliver a diversified portfolio and demonstrate tangible time and cost savings to their customers,” explained Peker.

There is strong latent demand for robo-advice among women investors

Women online investors are not only more likely to be using robo-advice services than men, the interest to start using these solutions among women is also higher, with similar trends observed across the globe.

For instance, 29% of women online investors in the US currently use robo-advice compared to 22% among male online investors. While in Australia, women online investors are more likely to consider using robo-advice in the future than men (40% vs 36%).

“Providers that intend to satisfy the strong latent demand for robo-advice among women investors will do well to understand the distinct needs and priorities of these investors,” said Peker. “When selecting a robo-advice provider, women online investors are more likely than men to prioritise the user interface (55% vs 49%) and education initiatives (40% vs 34%) but are less like to focus on fees (41% vs 53%).”

Micro-savings has widespread popularity in Australia, but competition is arriving

The adoption of robo-advice in Australia remains behind established markets like the US (7% vs 23%), but providers like Raiz – a micro-saving and investing app – has gained significant traction with over 200,000 active customers nationwide.

“Raiz’s popularity highlights the appeal of micro-savings functionality among Australian investors. For other robo-advice providers, brand awareness appears to be an issue, with less than 12% of Australian online investors saying they are aware of providers like Stockspot, Spaceship Voyager, Clover or Sixpark, respectively,” said Peker.

“Nonetheless, there is significant scope for growth with 38% of Australian online investors considering using robo-advice in the future. The recent launch of solutions like CommSec Pocket and Vanguard Personal Investor gives Australians greater access to low cost, diversified portfolios. But to stand out, providers must demonstrate their cost and time savings benefits, and how the service is the ideal option to begin their investing journey,” explained Peker.

About the report

The Investment Trends Robo-advice Report uncovers the adoption of robo-advice services among current online investors across the globe. The Report is based on detailed online surveys completed by almost 20, 000 online investors across eight major countries between February and December 2019.

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