Robo-Advisors Won't Dent These 4 Firms
Some robo-advisors have a good chance of becoming profitable, but Credit Suisse, UBS, Invesco, and BlackRock will be able to fend off the threat.
In 2015, positive sentiment toward robo-advisors was about at its peak with predictions of them disrupting the traditional wealth management industry. However, at that time we wrote a report titled "Hungry Robo-Advisors Are Eyeing Wealth Management Assets," taking the opposite view, stating that the economic moats of established financial institutions would keep them safe. Additionally, we opined that due to the high cost of client acquisition and low profitability of robo-advisors that many of them would go out of business or be acquired.
Our negative view on them largely played out. Currently, all signs point to the largest, standalone robo-advisors being unprofitable; multiple robo-advisors have chosen to sell themselves, likely due to their uncertain future; and the established investment service firms are still going strong. In fact, some of them have developed digital advice services in the last several years that have gathered more assets than the standalone robo-advisors that have been around for about a decade. With all that said, the pendulum of market sentiment has likely swung too far to the negative side.
Michael Wong does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.