Automated investing services, also known as robo-advisors, are growing rapidly as they seek to provide customers with low-cost portfolios designed accordingly to each investor’s risk tolerance.According to Cerulli Associates, a financial services research firm, assets under management of robo-advisors will rise by 2,500% to US$489 billion in 2020 from US$18.7 billion in 2015.One of the regions that will be driving this trend is Asia-Pacific, which is expected to surpass Western Europe and power most the private wealth’s growth for the next decade and beyond.
Given the region’s high Internet penetration rates, its large millennial population and the changing consumer behavior moving towards greater digitalization, Asia will likely drive the real growth of robo-advisors, predicts Credit Suisse. John James, founder and CEO of Australian automated investment platform BetaSmartz has seen growing interest in robo-advisor in the Asia-Pacific region. “Australia was where the business evolved, but we are experiencing strong demand from the US and Asia,” James said in an interview with Finextra. “Both of these markets are undergoing regulatory change and there is a shift from commission-based to fee-based services occurring with product manufacturers looking to control the digital distribution channel.”