Hype vs. Reality: The Coming Waves of Robo-Advisors Hype vs. Reality: The Coming Waves of Robo-Advisors

One of the hottest topics today in the fast-evolving investment management business is the emergence of robo-advisors. Are robo-advisory services—automated, low-cost investment advice offered through digital platforms—a true transformative market development, or just hype?

Robo-advisory services could usher in the next round of huge change to the investment management industry. Although robo-advisors represent an important market opportunity for the financial services industry, there remains understandable uncertainty. How and when robo-advisory is embraced by consumers will determine not only the success of these new offerings, but also whether there could be a broader transformation of the investment management business as a whole.

According to A.T. Kearney's 2015 Robo-Advisory Services Study, robo-advisors will be mainstream within three to five years—and the financial services industry must get ready (see figure). Our groundbreaking consumer research, based on a survey of more than 4,000 U.S. adult banking customers, explores consumers’ awareness of, interest in, and expected adoption of robo-advisory services. Based on the consumer research, together with our proprietary Consumer Investment Market model, we believe that the robo-advisory market is in its early stages and will experience exponential growth in the coming years.

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