Deloitte predicts robo-advice could be bigger than BlackRock
Robo-advisers could have $2.2tn in global assets under management by 2020 and had the potential to surpass the likes of BlackRock by 2025, according to a recent study from Deloitte. Investors' preference for passive investing is behind an increase in flows towards the platforms. The desire of wealth managers to digitise their offerings in the face of squeezed profit margins is also driving the growth of robo-advice. 

The market for disruptive wealth management has exploded, but could it displace the world’s largest asset manager by 2025?

Assets managed by robo-advice platforms and digital wealth managers could surpass that of incumbent giants such as BlackRock within a generation, according to a new report.

Compiled by Deloitte, it forecasts a 2020 market size of $2.2trn for robo advisers, growing to $16bn by 2025. The current assets under management of the biggest incumbent in the market today BlackRock is less than this. Of course, BlackRock, for example, is also a huge beneficiary of the growth is passive investing brought about both directly and indirectly through robo advice. In addition, the firm has a chunky stake in one of the UK market leaders Scalable Capital.

While this all sounds very bullish for robo-advice, the report notes that total levels of assets managed by traditional players is likely to remain high as a percentage of total assets. Nonetheless, it says a broader process of ‘digitisation’ is occurring within the wealth management space.

“Digital transformation of the wealth management industry is not a pure technological challenge. As the likelihood of returning to pre-crisis revenue margins is remote, wealth managers need to reinvent their business model to adapt to existing clients’ changing needs and to capture new clients while reducing operating expenses on a relative basis” the report noted.