How many investors use robo-advisors? (2024)

How many investors use robo-advisors?

Americans are generally warm to robo-advisors, with only 36% saying they're not open to using one to manage their investments. The rest haven't ruled them out. Some are lukewarm, with 38% saying they may be open to using a robo-advisor, while 26% answered yes. Just 1% of respondents currently use a robo-advisor.

Do investors really benefit from robo-advisors?

While a robo-advisor can be efficient in managing your investing decisions, a human advisor may be best for more complex decisions like helping you choose the right student loan repayment plan or comparing compensation packages for a new job. Cost: If cost is a factor, robo-advisors typically win out here.

What is the average rate of return for a robo-advisor?

Robo-advisor performance is one way to understand the value of digital advice. Learn how fees, enhanced features, and investment options can also be key considerations. Five-year returns from most robo-advisors range from 2%–5% per year.

How big is the market for robo-advisors?

Report CoverageDetails
Base Year2022
Market Size in 2022USD 5.82 Billion
Market Size in 2032USD 98.09 Billion
CAGR32.64%
5 more rows
Jan 2, 2024

What percentage of people use robo-advisors?

75% of millennials would consider using a robo-advisor — the highest of any generation — while just 43% of baby boomers say the same. Additionally, men (69%) are more likely to consider using a robo-advisor than women (58%). Despite this willingness, just 1% of respondents with investments say they use a robo-advisor.

What percentage of investors use an advisor?

There are many benefits to working with a financial advisor, yet only 35% of Americans have one, according to the most recent Northwestern Mutual 2022 Planning & Progress Study. And if you're among the 65% of people who don't have an advisor, it may be time to get one.

Do rich people use robo-advisors?

Digital Advisor Use Dropped in 2022

High-net-worth investors exited robo-advisor arrangements at the highest rates. Here's how the data broke down along asset levels: $50,000 or less: A drop from 23.6% to 20.6% in 2022, which translates to a decrease of 3 percentage points.

Do millionaires use robo-advisors?

According to Spectrem, on a scale of 1 to 100 (1 being low and 100 being high), wealthy investors rated their knowledge of robo advisers at 15.47, and only 6% said they have ever used one.

Do robo-advisors really work?

Key Takeaways. Robo-advisors can be worth it for set-it-and-forget it investors who want automated, diversified portfolios. These low-cost, low-minimum platforms are ideal for novice investors seeking competent portfolio management.

What is the biggest downfall of robo-advisors?

Limited Flexibility. If you want to sell call options on an existing portfolio or buy individual stocks, most robo-advisors won't be able to help you. There are sound investment strategies that go beyond an investing algorithm.

What are 2 cons negatives to using a robo-advisor?

The generic cons of Robo Advisors are that they don't offer many options for investor flexibility. They tend to not follow traditional advisory services, since there is a lack of human interaction.

Do robo-advisors outperform the market?

Robo-advisors often build portfolios using a mix of various index funds. But depending on the asset class mix and the particular index funds selected, a robo-advisor may underperform or outperform a broad equity index like the S&P 500.

How many Americans use robo-advisors?

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.

Do robo-advisors outperform the S&P 500?

This will vary significantly depending on the risk profile of the portfolio, broader market conditions, and the specific robo-advisor used. Some robo-advisor portfolios may outperform the S&P 500 in certain years or under specific conditions, while in others, they underperform.

How risky are robo-advisors?

3 Human error

A third risk of using robo-advisors is that they may be affected by human error or negligence. Robo-advisors are not completely autonomous; they still depend on human intervention and supervision to operate and improve.

Who is the target audience for robo-advisors?

Target Demographic

For robo-advisors, these include Millennial and Generation Z investors who are technology-savvy and still accumulating their investable assets.

Do robo-advisors beat human advisors?

The type of advisor that is better for you depends on what your financial needs are. For core investing and planning advice, a robo-advisor is a great solution because it automates much of the work that a human advisor does. And it charges less for doing so – potential savings for you.

What is the outlook for robo-advisors?

In the Robo-Advisors market, the number of users is expected to amount to 3.270m users by 2028. The average assets under management per user in the Robo-Advisors market is expected to amount to US$6.45k in 2024.

How many people actually use financial advisors?

It is estimated that in the United States, 35% of people have a financial advisor. This indicates that almost one for every three of the population has sought advice from a professional financial advisor in managing their finances and investments.

What is the average investor rate?

The average stock market return is about 10% per year, as measured by the S&P 500 index, but that 10% average rate is reduced by inflation.

What percentage of millionaires use financial advisors?

The wealthy also trust and work with financial advisors at a far greater rate. The study found that 70% of millionaires versus 37% of the general population work with a financial advisor.

Why do robo-advisors fail?

Robo-advisors lack the ability to do complex financial planning that brings together your estate, tax, and retirement goals. They also cannot take into account your insurance, general budgeting, and savings needs.

What is the largest robo-advisor?

Top-10 Robo-Advisors By Assets Under Management
  1. Vanguard Robo-Advisors. AUM: $206.6 billion. ...
  2. Schwab Intelligent Portfolios. AUM: $65.8 billion. ...
  3. Betterment. AUM: $26.8 billion. ...
  4. Wealthfront. AUM: $21.4 billion. ...
  5. Personal Capital Advisors. AUM: $16.1 billion. ...
  6. Blooom. AUM: $5.0 billion. ...
  7. Acorns. AUM: $4.7 billion. ...
  8. M1 Finance.
Oct 11, 2023

Are robo-advisors better than financial planners?

Unlike live financial advisors, robo-advisors use computer algorithms to manage investment portfolios and make investing decisions. They typically have lower minimum investment requirements than financial advisors, and they tend to be less expensive.

Which robo-advisor has best returns?

Learn more about how we review products and read our advertiser disclosure for how we make money. According to our research, Wealthfront is the best overall robo-advisor due to its vast customization options, fee-free stock investing, low-interest rate borrowing, dynamic tax-loss harvesting, and other key features.

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