Robo advisors are automated investment platforms that use algorithms to manage and allocate investor's funds. These services analyze each customer's current financial status, risk aversion, and goals. From here, they recommend the best portfolio of stocks available based on that data.Thanks to this ease of use, robo investing or automated investing has been on the rise in recent years. The reasonably wide selection of online financial advisory services on the market has given consumers options for automating their investments.BI Intelligence, Business Insider's premium research service, forecasts that robo advisors will manage approximately 10% of all global assets under management (AUM) by 2020. This would equate to approximately $8 trillion. So it's clear that these automated services are becoming more prevalent.But a user-friendly experience is just one reason that robo investing has been steadily growing in popularity. Below, we've put together a list of the four most significant factors in automated investing growth.1) Global wealth is concentrated.The majority of worldwide AUM is in the hands of an extremely small portion of the global population. Therefore, only a few high-net-worth individuals (HNWIs) would need to let robo advisors manage even a portion of their money in order to drastically affect the AUM for automated investors. BI Intelligence expects 60% of these HNWIs to invest 20% of their assets in robo advisors by 2020, which would equate to approximately $6.4 trillion.2) Asia will push robo advisor adoption.The Asia-Pacific (APAC) region will overtake the U.S. in investable wealth later this year. Therefore, BI Intelligence expects the APAC region to represent $2.4 trillion in robo advisor AUM by 2020.3) Consumersare interested in automated investment.The investing public is largely receptive to robo advisors thanks to the services' ease of use and ability to take stress and worry away from investors. BI Intelligence found that 49% of HNWIs worldwide would consider letting a robo advisor manage at least some of their wealth.4) Robo advising has advantages over traditional human financial advisors.In a majority ofcases, companies are able tooffer robo advisor services with significantlylower fees than traditional human advisors whilestill maintaining approximatelythe same return on investment. This letsthese companies promotethemselves to a much broadersegment of the market, such as millennials who might be otherwise averseto place their trust and their moneyinto a human advisor's hands.On top of this, robo advisors usuallyautomate itemssuch as application processing. This eliminatesa portion of the friction for customersand also helps companies lowertheir labor costs, which then turnsinto savings for customers.Finally, robo advisors oftentimes offer auto-rebalancing, accessibility from multiple devices (smartphones, laptops, tablets, etc.), extremely low or nonexistent minimum investments, and tax loss harvesting.More to LearnThis overviewof robo advisors' growing popularity is just the beginningwhen it comes to the automated investing market.That's why BI Intelligence spentmonths putting togetherthe greatestand most exhaustiveguide on robo advisorsentitled The Robo-Advising Report: Market forecasts, key growth drivers, and how automated asset management will change the advisory industry.To get your copy of this invaluable guide to the payments industry, choose one of these options:Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIPPurchase the Complete Robo-Advisor Research Collection, which contains 5 in-depth reports, slide decks, and appendices. >> BUY THE BUNDLEPurchase the report and download it immediately from our research store. >> BUY THE REPORTThe choice is yours. But however you decide to acquire this report, youve given yourself a powerful advantage in your understanding of the fast-moving world of robo advisors.Join the conversation about this story
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