The Emergence Of Robo Advisory Services « (2024)

Americans invested an average of $70,000 via robo advisors last year, 5x more than the European market and 9x more than Chinese market

Over the past six years, roughly 180 million people have started using robo-advisors to build trading strategies, buy stocks, and grow their portfolios. Nearly one-fifth were from the United States, the world’s largest robo-advisors market. Although these digital investment managers have seen their popularity grow worldwide, Americans invested much more money via robo-advisors than any other nation.

According to data presented by AltIdex.com, Americans invested an average of $70,000 via robo-advisors last year, five times more than Europeans and nine times more than Chinese.

Average AUM per User in the US Robo Advisors Market to Hit Over $116,000

Before robo-advisors, investing money in the stock market was mainly reserved for those who could afford to hire an expert to guide them or had the expertise to do it themselves. But thanks to these platforms, people can now invest in stocks without actively managing their portfolios, with algorithms adjusting their risk preferences, making data-driven decisions, and maximizing returns. This easier way of trading with lower fees has drawn millions of people to the market.

According to a Statista survey, the total value of assets under the management of robo-advisors surged by 1,190% between 2017 and 2022, jumping from $187bn to $2.45trn worldwide. Most of that impressive growth came from the US market, which saw more investments via robo-advisors than any other country.

Last year, Americans invested an average of $69,174 via robo-advisors. The European market saw one-fifth of that value, with $12,931 in average assets under the management (AUM) per user. Chinese market was far behind with an average AUM per user of $7,552.

Statista expects Americans to continue using robo-advisors to grow their portfolios, with the average AUM per user surging by almost 70% and reaching over $116,000 by 2027. The European market will see a 55% growth in this period, with the average AUM per user rising to $19,890 in the next four years. Due to regulatory restrictions imposed on robo-advisory services, China’s growth is set to plummet from 2022 onward. According to Statista, the average AUM per user in the Chinese market will drop by 40% to $4,461 in the next four years.

US Leads in Average AUM, but Europe to See the Biggest User Growth

Although the US market will see more investments in the robo-advisors segment, Europe leads in total user count. Last year, roughly 30 million Americans used robo-advisors to grow their assets. Statista expects another 20 million people in the US to start using their services in the next four years, pushing the total user count to nearly 50 million.

The European market is forecasted to see 61.7 million users by 2027, up from 43.87 million in 2022. On the other hand, regulatory restrictions will significantly cut down the user count in the Chinese market, with the number of people using robo-advisors plunging from 54.1 million in 2022 to only 520,000 in 2027.

Overall, Statista expects more than 230 million worldwide to start using robo-advisors in the next four years.