The bank said in a recent report it estimates a robo advisor needs assets of between $11.3 billion and $21.5 billion to break even.
A recent HSBC report suggests North American robo advisors need to manage between $11.3 billion and $21.5 billion to break even.A key question the report raises is whether robos can attract wealthier customers as opposed to just millennials.
Assuming a fee level of .25%, a robo advisor needs to manage between $11.3 billion and $21.5 billion in order to stay out of the red. Currently, the only robos managing that level of money are Betterment and Wealthfront , the report said. , falls closest to the range with an AUM of $8.5 billion. However, other robos such as Acorns, Stash and SigFig all manage under $2 billion in assets.
Robos burst onto the scene in recent years as younger investors looked for cheaper, more intuitive alternatives than what was provided by traditional players in the space. The incumbents eventually responded —And while the fintechs have done a good job gaining market share among young investors, the report suggests the robos might struggle to attract higher-end clientele.
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