Have COVID-19 lockdowns driven robo-advice use?

6 July 2020

Companies providing robo-advice solutions may be amongst the winners of changing practices resulting from the COVID-19 pandemic, according to new research out of the US.

A survey by GlobalData has revealed that the use of robo-advice has been increasing across all age groups even amongst baby boomers.

It said that in the US, the number of baby boomers using a robo-advisor rose from 7.2% in 2019 to 7.8% this year, while amongst Generation Z, it rose from 13.6% to 16.4%

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The analysis said that the appetite for digital investment platforms was clearly on the rise and that it was likely the COVID-19 crisis in the US would prove that electronic advisers could successfully navigate an economic downturn.

GlobalDate Wealth Management analyst, Sergel Woldemichael said the COVID-19 pandemic had put the spotlight on all things digital.

“For example, Wealthfromt saw account openings rise 68% during the crisis, while, from a returns perspective, Wealthsimple’s mutual funds have outperformed traditional Canadian funds,” he said. “Meanwhile, traditional players are seeing significant reductions in assets under management and are playing catchup in terms of utilizing technology to keep their business alive.”

He said lockdown measures had accelerated the wealth management industry’s shift to digital which had benefited robo-advice.

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