Elon Musk, the founder of Space X, believes that if humans are to remain relevant in the future, they must be ready to merge with computers to form cyborgs. AI and its subset of Machine Learning, is growing exponentially, threatening to take over jobs in most industries.
While the technology is still in its nascent stages in most sectors, it is already a revolution in the financial industry. The thought of a cyborg may therefore not be farfetched especially considering that most of the top hedge fund performers in 2017 are a hybrid.
According to the hedge fund research firm BI Intelligence, the assets under management by robo-advisors will rise from $0.6 trillion in 2017 to $1.5 trillion in 2018. By 2020, BI Intelligence predicts that Robo-advisors will be controlling over $8 trillion, which will be around 10% of the total global assets under management.
If you are looking to invest in Robo-advisors in 2018, here are the top ten companies to watch.
Betterment is among the largest automated investing services provider on the market today. As of October 2017, the company’s assets under management stood at $10 billion making it the largest independent robo-advisor by assets globally.
In 2018, Betterment’s growth is expected to skyrocket given its growing popularity in retirement investing.
Recently, the firm has raised $70 million to develop a new messaging feature that will bring a human touch to its robo-advisors.
The hybrid model will allow users the advantages that come with both human financial advisors and robo-advisors.
Founded in 2011, Wealthfront boasts over $7.5 billion in asset under management.
Apart from offering a 0% management fee for accounts with less than $10,000, the firm provides direct indexing for accounts with over $100,000. This makes it the best robo-advisor for high net worth investors looking to take advantage of tax loss harvesting and direct indexing.
In 2018, Wealthfront is expected to give Betterment a run for its money through its newly modified platform and improved marketing techniques. The firm has also recently introduced hybrid services to reach clients who prefer a human touch.
The Charles Schwab Intelligent Portfolios has over $10 billion in asset under management. Since its launch in 2015, the robo-advisor has managed to claim its place amongst the top industry players.
In 2017, Schwab Intelligent Portfolios was rated as the best in class in terms of cost, investment approach, and platform and tools.
Charles Schwab, the robo-advisor parent company, has a record of innovation and therefore there is a reason to believe that the robo-advisor will maintain its growth pace in 2018 and beyond.
According to the Financial Samurai, Personal Capital is the best hybrid robo-advisor in the market today. As of August 2017, the firm’s assets under management amounted to $5 billion.
The investment firm is among the most innovative in the industry and is popular with high net worth individuals.
According to Wealthadvisor, 39% of Personal Capital assets under management comprises of investors with $1 million and above in investable assets. Recently, Personal Capital has raised $40 million from investors in its extension bid.
Appearing number four in NerdsWallet 2017 top picks, WiseBanyan is among the few robo-advisors that offer portfolio management services free of charge. The automated investment advisor was launched in 2014 and has since then grown to over 25,000 clients with around $100 million in assets under management.
WiseBanyan focus on millennials with low and medium income is its greatest strength and as 2018 kicks in, its business is bound to grow as more millennials continue to turn to automated investing.
According to a 2017-2018 survey by Roth Capital Partners, at least 74% of millennials are positive that the economy will continue to do better and are therefore likely to invest more in 2018.
With over $85 billion in assets under management, Vanguard’s hybrid investment advisor is the biggest in the industry.
According to InvestmentNews, Vanguard’s hybrid investment platform is the best and probably may be the template the industry needs to follow.
Since its launch in 2015, Vanguard’s Personal Advisor Services has seen explosive growth with 2017 being the culmination. To keep up with the demand, the investment advisor is adding CFPs to staff call centers.
In 2018, Vanguard Personal Advisor growth is expected to skyrocket as investors flock in to take advantage of the favorable economic climate.
TD Ameritrade Essential Portfolios is another robo-advisor with a promising 2018 and beyond.
Since its launch in November 2016, the firm has grown to nearly $16 billion in assets under management as of June 2017. The robust growth can be attributed to TD Ameritrade stable brokerage business which dates back in 1975.
In 2017, the firm has rigorously been updating its hybrid advisor tools to improve user experience. The latest innovation is a personality insights tool that lets investors link their Facebook account and get a personality profile.
With the investment in innovation, TD Ameritrade Essential Portfolios growth is expected to take off in 2018.
Fidelity Go is the robo-advisor arm of the Fidelity, the US multinational investment firm.
The robo-advisor is among the top 10 best performers in 2017 according to a report by Condor Capital.
In 2018, the automated advisor growth is expected to skyrocket as it continues to invest in improving its hybrid platform.
Nutmeg is the largest automated investing services provider in the UK.
The robo-advisor was founded in 2011 and has since then managed to grow its assets under management to over £900 million.
Even though the firm has been going through hard times in the recent years, it has managed to grow its customer base to 25000. In 2018, the robo-advisor is likely to keep growing as the UK market continues to open up to digital investing.
Founded in 2013, Blooom is a robo-advisor that manages retirement accounts for people with small accounts. As of October 2017, the firm has over $1 billion in assets under management.
The company's robust growth can be attributed to its business model which focuses on low and middle-income investors. Blooom has also been among the most innovative companies in the industry in terms of tools and marketing techniques.
On February 2017, the company raised $9.15 million to fund expansion and has utilized the capital efficiently to double its asset under management from $500 million in February to over $1 billion today. In 2018, the robo-advisor is expected to maintain the upward trajectory given the company’s proven performance and robust marketing strategies.