Robo-Advisors are a Big Hit in U.S. – but not so much in Europe
Financial advisors need to be aware: robo-advisor services are popular in America, but not pervasive in Europe. Asia, though, is seeing faster growth.
A new study shows that robo-advisor services are predominantly used in the U.S. and that only 1% of survey respondents in major European countries like the U.K. and Germany say they are using robo-advisor strategies in their investment portfolios.
“Adoption of robo-advice in the United States accelerated dramatically with the entrance of the major retail investment brands,” says Investment Trends in its “2016 Robo-Advice Report.” While 950,000 online share investors already embrace robo-advice, this figure has nearly doubled in the last 12 months alone (47% of the 950,000 users started using robo-advice in the past year). By comparison, penetration of robo-advice remains minuscule outside the United States.”
The numbers seem to back the study up. A 2016 report from Money Observer shows the entire robo-advisory market in the U.K. totaled (US) $174 million, while the U.S. robo-advisory market hit $75 billion.
Meanwhile, a separate study from China Merchants Securities shows that robo-advisory growth in Asia is roughly half that of the U.S. and will remain so through 2020 — although demand is picking up steam, relative to Europe.
A big part of the disparity is in country-specific investment cultures, experts say.
“Asian investors, for example, tend to be much closer to the specific investment vehicles they invest and trade in, so they’re comfortable buying and selling securities directly,” notes Lule Demmissie, managing director of investment products and retirement at TD Ameritrade. “The implication is that robo-advisors, and also packaged products like managed money in general, have not taken hold in Asia as they have in U.S. markets.”
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