Get ready for robo-advisory winners and losers
The US market is due a shakeout as recession looms.
Global equities are displaying all the signs of being in a downturn.
Indeed, in the words of Bank of America Merrill Lynch’s research analysts in December, it’s “a big nasty bear market”.
And in a bear market, who do you want to look after your money? Probably someone who was around in the last one, and certainly someone you can call when things get hairy, which means the boom of recent robo-advisers could well be coming to an end.
Having ridden up the bull market over the last decade, robo-advisers now number about 300 globally, with an estimated $1.5 trillion to $2 trillion in assets under management.
According to fintech research company Burnmark, there are more than 200 in the US, about 30 in Germany and between 15 and 20 in each of China, the UK, India and France. Assets under management had been expected to reach $3.7 trillion by 2025, but that did not factor in a recession.
While it may be over a year away, a recession is nonetheless on the horizon now, and already the independent robo-advisers that don’t have a downturn under their belts are starting to get twitchy.