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Robo-advice to be bigger than BlackRock, claims report




By Daniel Lanyon on 17th October 2017

https://goo.gl/PevHeZ

The market for disruptive wealth management has exploded, but could it displace the world’s largest asset manager by 2025?

 
 

Assets managed by robo-advice platforms and digital wealth managers could surpass that of incumbent giants such as BlackRock within a generation, according to a new report.

 

Compiled by Deloitte, it forecasts a 2020 market size of $2.2trn for robo advisers, growing to $16bn by 2025. The current assets under management of the biggest incumbent in the market today BlackRock is less than this. Of course, BlackRock, for example, is also a huge beneficiary of the growth is passive investing brought about both directly and indirectly through robo advice. In addition, the firm has a chunky stake in one of the UK market leaders Scalable Capital.

 

While this all sounds very bullish for robo-advice, the report notes that total levels of assets managed by traditional players is likely to remain high as a percentage of total assets. Nonetheless, it says a broader process of ‘digitisation’ is occurring within the wealth management space.

 

“Digital transformation of the wealth management industry is not a pure technological challenge. As the likelihood of returning to pre-crisis revenue margins is remote, wealth managers need to reinvent their business model to adapt to existing clients’ changing needs and to capture new clients while reducing operating expenses on a relative basis” the report noted.

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