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December 09, 2015 at 12:00 PM
The market for robo-advice is poised to explode, according to a new Deloitte forecast.
The consultancy predicts robo-advice could grow to be a $5 trillion to $7 trillion segment by 2025 in the United States, representing 10% to 15% of U.S. retail assets under management.
And Deloitte says this estimation could be conservative.
This is massive compared to today. Deloitte’s research shows that robo-advice now accounts for less than $100 billion of the $32 trillion U.S. retail assets under management.
Deloitte predicts that in 2025 there will be $51 trillion retail AUM in the U.S., and 10%-14% of that will belong to robo-advice.
Deloitte comes at this estimation through two different routes.
First, it started by looking at some of the numbers from its recent research report, “The Future of Wealth in the United States,” which forecast the changes in generational wealth over the near term.
Because robo-advice has a special appeal to a new generation of investors, including Generations X and Y, Deloitte looked at these two generations.
According to its research, Gen X and Gen Y will account for one-third of all U.S. retail assets under management within 10 years.
“If you assume 20% to 30% penetration rates for robo-advice, you get to $5 to $7 trillion,” the report concludes.
