Robo Advice: Revolution or Evolution? Including: Robo advice, automated financial planning, financial advice, brokerage, fund platforms Covering: Australia, Europe, UK, USA

 Table Of Content

EXECUTIVE SUMMARY

Robo advice is not a new concept, but is gaining a lot of global attention
There are far fewer pure robos than the media would have us believe
Focus is on automated investment management; there are very few automated advice propositions
Early movers built from scratch, but start-ups are now seeking to build partnerships with established players
Low cost automated investments will become the core building block of financial  planning
Many of the ‘me too’ automated investment propositions will fall by the wayside unless they continue to develop
The market for automated investment management services will grow significantly, but hybrids will be the dominant model
The addressable market for virtual advice is huge, but very few propositions have come forward to meet this demand

WHAT IS ROBO ADVICE?

Robo advice: a catch all term for remotely delivered wealth management
Defining ‘robo advice’
Automated investment management solutions are the dominant model; but how automated are they?
There are only a handful of automated financial planning propositions in the market  today
Why is ‘robo advice’ under the spotlight?
Propositions are only as good as the algorithms

EMERGING BUSINESS MODELS

Pure play start-ups have led the charge to date
The cost of acquisition is the elephant in the room for start-ups
Re-focus on the B2B market to drive profitability
Industry stalwarts are now seeing the potential of automation; and have important strategic advantages over the start-ups
Which play will the current incumbents make – build, partner, or buy?
In the B2B space, robo for advisers is nothing new, but some are now embracing the opportunity to expand the reach of their business
Robo advice will place widespread pressure on margins and fees
The impact on the advice market will take longer to play out, and will result in advisers ultimately moving up the advice value chain

WHAT WILL THE WINNERS LOOK LIKE?

Many of the ‘me too’ automated investment propositions will fall by the wayside unless they continue to develop
Automated investment propositions will need get much better at targeting clearly defined, profitable consumer segments
Differentiation needs to be on a feature that the mass market consumer can      understand
A truly customer-centric approach will be required to shift customers from a transactional to an ongoing relationship
Winning propositions will make better use of behavioural economics to enhance the user experience and increase conversion and retention rates
Winning propositions will need to engage consumers in new ways, using visual stimulus to create emotional responses
Gamification can ‘reward’ consumers for building knowledge; virtual reality can allow them to test drive future outcomes in a safe environment
Winning solutions will blend the human touch with automation
Next generation ‘cyborgs’ will shift the boundary between human and robot within five years – think ‘virtual advice’
New revenue models to reflect what consumers are actually paying for?
Big data, data giants and analytics: The final frontier
Robo 3.0 has the potential to do so much more than personal finance

SIZE AND GROWTH OF THE GLOBAL MARKET

Robo advice growth is about to take off
Drivers for global growth
Robo advisors are everywhere, but the US still dominates the global landscape
The US still presents the best market opportunity and will continue to drive global  growth
Global forecasts for robo advice

COUNTRY PROFILE: USA

Introduction
Market Background and Development History
Market Size and Growth
Competitive Landscape
Regulatory Environment
Future Prospects

COUNTRY PROFILE:  UK

Introduction
Market Background and Development History
Market Size and Growth
Competitive Landscape
Regulatory Framework
Future Prospects

COUNTRY PROFILE: AUSTRALIA

Introduction
Market Background and Development
Market Size and Growth
Competitive Landscape
Regulatory Environment
Future Developments

APPENDIX: US COMPANY PROFILES

Betterment
Financial Guard
FutureAdvisor (a BlackRock Company)
Intelligent Portfolios from Charles Schwab, Inc.
LearnVest Inc.
Personal Capital
SigFig Wealth Management LLC
Vanguard PAS
Wealthfront, Inc.
WiseBanyan, Inc.

APPENDIX: UK AND EUROPEAN COMPANY PROFILES

Easy Folio
eValue (Investment Solutions)
Fintego Managed Depot
Ginmon GmbH
Marie Quantier
MoneyFarm
Nutmeg Savings & Investment Limited
Parmenion (Aberdeen Asset Management)
Quirion (Quirin Bank AG)
Scalable Capital
True Wealth Inc.
vaamo Finanz AG
Wealthify
Wealth Objects Limited
Wealth Wizards
Yomoni

APPENDIX: AUSTRALIAN COMPANY PROFILES

Clover.com.au
Decimal Software Ltd
Ignition Wealth (Ignition Direct)
QuietGrowth
Stockspot

List Of Figures

Figure 1: True robo solutions provide a recommendation based on personal information the customer has provided 25
Figure 2: Automated investment management solutions today rarely deliver an end-to-end automated solutions across the entire advice value chain 26
Figure 3: Robo advice solutions today are only scratching the surface of meeting consumers’ financial needs 31
Figure 4: Robo advice: disruptor, enabler or market maker 32
Figure 5: Understanding the customer: a comparison of the questionnaires used by some of the leading automated investment management solutions 36
Figure 6: Understanding the customer: A sample of typical questions asked 36
Figure 7: Comparing asset allocations for a moderate risk profile for selected automated investment managers 37
Figure 8: Robo entrepreneurs with a technology or investment banking background 39
Figure 9: From B2C Disruptors to B2B2C Enablers 42
Figure 10: Robo 1.0 to Robo 2.0 43
Figure 11: Examples of build, buy, or partner models 46
Figure 12: Australian technology provider Decimal Software provides a white labelled solution to financial institutions 52
Figure 13: The UK’s Money on Toast has switched from an automated investment management proposition to providing a low cost remote advice service 57
Figure 14: Average AUM per client for selected robo advisors 61
Figure 15: New ways of communicating with consumers are needed: Bloom in the US 65
Figure 16: Behavioural biases that are inherent in pension decumulation decision making 69
Figure 17: Robo advice of the future: shifting from push to pull 76
Figure 18: Robo Advice 3.0 77
Figure 19: Robo advisors of the future may bring together families and other groups, and offers these groups solutions that span multiple aspects of their life 79
Figure 20: The Six D’s of Exponential Technology 80
Figure 21: Drivers for the development of the robo advice market 81
Figure 22: Online population by age and geography 82
Figure 23: Assets under management by geography 83
Figure 24: Example robo advice proposition by geography 85
Figure 25: Market Opportunity Map 87
Figure 26: A number of robo advisors in the US has climbed rapidly since 2011: Examples of recent robo advisor launches in the US 92
Figure 27: Many robo advisors in the US are hybrids, with elements of their processes being assisted by a human. Some have human advisors on hand to assist customers 93
Figure 28: Preference for human, automated vs. hybrid advice amongst US consumers 94
Figure 29: Assets under management of the leading robo advisors in the US, $bn 96
Figure 30: Robo advice awareness and usage by age in the US, 2015 98
Figure 31: US households by assets (excluding primary residence) in 2015, thousands 99
Figure 32: Examples of US robo advisors by distribution channel 100
Figure 33: Level of automation across the advice value for selected US robo advisors 102
Figure 34: A comparison of the prices charged by selected US robo advisors 103
Figure 35: A comparison of features provided by selected US robo advisors 105
Figure 36: Type of financial advisor experience US investors want 108
Figure 37: Increase in assets under management for the three largest robo start-ups in the US, compared to the next nine largest start-ups, May 2015 to March 2016 109
Figure 38: A number of robo advice propositions have come to market in 2016 114
Figure 39: UK robo advisors by distribution channel 121
Figure 40: Many robo advisors in the UK are hybrids, with elements of their processes being assisted by a human. Some have human advisors on hand to assist customers 122
Figure 41: UK robo advisors by level of automation across the advice value chain 123
Figure 42: A comparison of the prices charged by selected UK automated investment management propositions 124
Figure 43: Comparative performance of property over a 10 and 20 year time horizon 130
Figure 44: Stockspot’s suitability warning messages 132
Figure 45: A number of robo advice propositions have come to market recently 133
Figure 46: Household assets by category, A$bn, 2016 135
Figure 47: Australian robo advisors by level of advice and level of automation 137
Figure 48: QuietGrowth undercut Stockspot for all account sizes upon entry 139
Figure 49: Fee structures for selected Australian robo advisors 139
Figure 50: Map My Plan pricing and proposition (May My Plan website, June 2016) 142 

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