Robo-advisors have experienced a rapid expansion over the last decade as investors looked for low-cost automated wealth management services. The industry includes several startups, which have become competitors for large wealth management firms, pushing several banks to integrate this service into their offerings.
Robo-advisors can be compared based on several key metrics, such as fees, services, and the number of users. However, Assets Under Management (AUM) is a valuable indicator to assess the success and reputation of a Robo-advisor.
Here’s the list of the top global Robo-advisors by Assets Under Management (AUM):
Largest Robo-Advisors by AUM 2022
|Vanguard Digital Advisor||$130.7B||Jun-2022||Vanguard Digital Advisor AUM|
|Schwab Intelligent Portfolios||$64.4B||Jun-2022||Schwab Intelligent Portfolios AUM|
|Questwealth Portfolios||$30.0B||Sep-2022||Questwealth Portfolios AUM|
|Personal Capital Advisors||$20.5B||Sep-2022||Personal Capital Advisors AUM|
|M1 Finance||$5.5B||Sep-2022||M1 Finance AUM|
|Zacks Advantage||$3.0B||Jun-2022||Zacks Advantage AUM|
The Robo-advisory market
Robo-advisors are part of the financial technology (fintech) that is reshaping the wealth management industry. Although it is relatively new, this innovative solution has grown remarkably over the years.
According to Statista, the Robo-advisory market is expected to reach $1.66 trillion in AUM at the end of 2022. Moreover, AUM is expected to grow at 14.19% on a yearly basis, reaching $3.22 trillion in 2027.
Vanguard Digital Advisor is the largest Robo-advisor with an AUM of over $130 billion, followed by Schwab Intelligent Portfolios at $64.4 billion. This high AUM can be attributed to those two firms’ reputation in the wealth management and advisory industry over several decades.
On the other hand, Betterment, launched in 2008 and the first Robo-advisor in the US, manages over $30.7 billion of assets.
What are Assets Under Management (AUM)?
In general, AUM refers to the market value of assets managed by a company on behalf of its clients. It is a key performance indicator that measures a firm’s success in attracting customers and increasing its market share.
For Robo-advisors, this metric is essential to determine their revenues. Most platforms charge a fee as a percentage of assets under management (AUM), also known as a “management fee.” Generally, this percentage ranges from 0.25% to 1.00%.
Robo-advisors offer investors a wide range of services and are a convenient wealth management option. Although each company provides its distinct services at varying prices, Robo-advisors’ primary goal is to provide automated investment portfolios at a low cost to investors who may not be able to invest with traditional wealth management firms.
AUM changes over time due to market fluctuations or clients’ withdrawals and is usually updated quarterly. A higher AUM does not imply that the platform has better services or performance than others; alternatively, a lower AUM does not necessarily indicate a less trustworthy Robo-advisor.
We encourage investors to check the company’s financial statements and website and do their due diligence about the services and opportunities before opening an account with any Robo-advisor.