How Many Retirees Use Robo Advisors In Canada(New Data)

Research findings indicate that the anticipated user base in the Robo-Advisors market is set to reach 4.6 million users by 2027, reflecting the growing popularity of digital investment platforms. And ownership of robo-advisors, automated investment platforms, is most prevalent among households with incomes ranging from $50,000 to $500,000 and among the younger generations.

Also read: Exploring Retirement-Friendly Communities in the U.S.

Notably, nearly 7 out of 10 Millennial millionaires have invested some of their funds in robo-advisors or automated portfolios, underscoring the appeal of these digital investment tools to younger wealthier individuals. 

Moreover, the data shows that approximately 20% of Millennial and Gen Z households, who are well-informed about the investment products they own, have chosen to entrust some of their funds to robo-advisors. In contrast, the adoption rate drops to 13% for Gen X households and a mere 2% for Boomer+ households, encompassing the older generations.

Robo Advisor Companies Stats 2023 

The global robo advisory market was valued at $7.9 billion in 2022, and is projected to reach $129.5 billion by 2032, growing at a CAGR of 32.5% from 2023 to 2032.

According to Sources, there are very key insights to have regarding the statistics of Robo-advisors and its adoption in Canada.

These statistics help us know how well Robo-advisors have been adopted in Canada.

Assets Under Management (AUM) in the Robo-advisors market are projected to reach $81.Billion by the end of 2023. 

The AUM is a very valuable indicator to assess the success and reputation of a robo- advisor. 

Data shows Hearts & Wallet conducted a survey that approximately 20% of Millennial and Gen Z households, who are well-informed about the investment products they own, have chosen to entrust some of their funds to robo-advisors. In contrast, the adoption rate drops to 13% for Gen X households and a mere 2% for Boomer households, encompassing the older generations. 

The largest Robo-advisor by AUM in 2023 is reported to be Vanguard Digital Advisor, as of Dec 2022, it's number of clients are over 336 thousand according to investing in the web.

The number of people using the Robo-advisor market is expected to get up to 4.67 Million by 2027.

- Projections suggest robust growth with an expected annual increase (CAGR 2023-2027) of 14.41%, resulting in a total AUM of approximately $139.80 billion by 2027.

- Anticipated user base in the Robo-Advisors market is set to reach 4.670 million users by 2027, reflecting the growing popularity of digital investment platforms.

- The average assets under management per user in the Robo-Advisors market is estimated to be around $11.37 thousand in 2023, illustrating the accessible entry point for investors of varying financial backgrounds.

- Globally, the United States leads the way with the highest assets under management, expected to reach an impressive $1.1 million in 2023, underscoring the significant presence of robo-advisors in the U.S. financial landscape. These statistics depict a thriving market with opportunities for a diverse range of investors to engage in automated investment management.

Source :

Number of Robo-advisor companies in Canada in 2023

The first robo-advisor was launched in Canada in 2014. There are now around 14 robo-advisors available. The adoption of robo-advisors in Canada is poised for remarkable growth, with the number of users projected to surge from 278,000 in 2017 to a substantial 1,993,000 by 2027. 

The study indicates that most households allocate 10-15% of their portfolio to robo-advisors, leading to a diverse range of account sizes. Wealthier households invest over $250,000, while those with fewer assets may begin with as little as $500, highlighting the flexibility and accessibility of robo-advisors for investors of all backgrounds. 

These insights reflect the evolving landscape of investment strategies, with younger and moderately affluent households showing increasing interest in the convenience and accessibility that robo-advisors offer for managing their financial portfolios.

According to Almazora 2021, Canadian Robo-advisors held $11.4Billion in assets at the end of 2020. 

However, the introduction of Robo-advisors has made the process a lot easier for retirees.  The use of Robo-advisors has become more widespread and  gained dominance in recent times as we uncover;

To effectively understand the concept of Robo-advisors and why it's gained dominance in the finance sector; We would compare its price charge with traditional advisors:

Robo-advisors typically charge annual management fees ranging from 0.25% to 0.50% of your assets under management (AUM), although some opt for a fixed monthly subscription fee structure. These comparatively low fees, when contrasted with the rates of traditional financial advisors, represent a key advantage of robo-advisors.

Traditional financial advisors usually impose fees around 1.0% of your AUM per year, which may decrease for clients with larger balances. To illustrate the significance of this discrepancy, consider an investment balance of $100,000. A 0.25% robo-advisor fee amounts to $250 annually, whereas a 1.0% fee translates to $1,000 yearly.

It's important to note that, similar to your investment balance, fees can accumulate over time and substantially impact your long-term gains. Over a span of 20 years, for instance, a 1% advisory fee could cost you nearly $30,000 more than a 0.25% fee on an initial $100,000 investment. These findings underscore the financial benefits of opting for robo-advisors, which can help you maximize your long-term returns while minimizing the burden of fees.

This remarkable increase represents a remarkable 617% growth, underscoring the increasing popularity of these digital investment platforms. Moreover, the average funds under management per user are expected to double, rising from $11,000 in 2017 to a noteworthy $22,000 in 2027.

This translates to a substantial increase in total funds under robo-advisor management, projected to reach an impressive $44.59 billion within the next five years. 

These statistics reflect the expanding role of robo-advisors in shaping the financial landscape, offering accessible and efficient investment solutions for a broader spectrum of investors.

Robo-advisors have revolutionized the investment landscape by offering a hassle-free solution for passive, "set-it and forget-it" investors. These online platforms leverage automated algorithms to simplify financial planning, making investing more accessible and less complex.

Their proliferation has been significantly fueled by this convenience. In Canada, where there are approximately 17,000 Certified Financial Planners (CFP) according to FPCanada, these traditional financial experts are encountering the rapid growth of Robo-advisor companies and startups.

This shift underscores the changing dynamics in the financial industry, with technology-driven solutions becoming increasingly prevalent and user-friendly, serving a wider range of investors.

In 2023, Canada recorded about 29 Robo-advisor Companies and Start-ups according to Tracxn and this number keeps growing. 

Some of these Robo-advisor companies are;

WealthSimple (an online Robo-advisory and stock trading platform generally accepted in Toronto)

Moka ( a micro-savings and investment platform suitable for small-scale investors mostly based in Montreal)

Responsive (An AI-driven wealth management platform based in Vancouver )

Nest Wealth ( a platform which focuses on low-cost broad ETFs based in Toronto)

WealthBar (This platform uses both an online automated service and human support a d it's based in Vancouver) 

Find Bob( A platform that helps investors find opportunities for buying and selling assets based on Toronto)

ModernAdvisor ( A platform that focuses on building a portfolio of ETFs based on the investor's risk tolerance and it's based in Vancouver)
JustWealth (this automated system is based in Toronto)

           Just to mention a few of them
Find Bob( A platform that helps investors find opportunities for buying and selling assets based on Toronto)
ModernAdvisor ( A platform that focuses on building a portfolio of ETFs based on the investor's risk tolerance and it's based in Vancouver)
JustWealth (this automated system is based in Toronto)

New SaaS Robo-advisor Startups Launched by Year in Canada

It's no news to us that Robo-advisors are becoming trendy in the investment sector in Canada, we will then look into the launch of each Robo-advisor start-up per year.

We will begin with Canada's most popular Robo-advisor with hundreds of thousands of Clients and more than $15Billion in Assets Under Management; 

WealthSimple

WealthSimple affords the Investor the opportunity of opening accounts such as; TFSA, RRSP, and many more. It recently introduced a Cash Account.

WealthSimple was founded in September 2014 by Michael Katchen, Brett Huneycutt, and Rudy Andler. WealthSimple is Toronto-based. As of 2021, its number of employees in record is 600.

QuestWealth

This Robo-advisor is previously known as "Portfolio IQ". It works in partnership with Questrade. This Robo-advisor was launched in 2018. Among other Robo-advisors, this has the lowest cost fee for transactions, this is one of its greatest benefits. This Robo-advisor has a proven

 track record as it has portfolio records of about 10 years. A minimum of about $1000 is required to invest with them.

JustWealth; this is another popular Canadian Robo-advisor. It was Co-founded by Andrew Kirkland and James Gauthier in 2016. It has its own advantages such as an automated ability to review portfolio, plan finances for the Investor, diversify the portfolio and charges lower fees.

ModernAdvisor

This is Canada's most competitive robo-advisors when it comes to fees. They offer different accounts also such as RRSP, TFSA and many more. It launched in 2014 and had its last funding in September 23, 2015. It's majorly based in Vancouver, Canada. This Robo-advisor is unique in that it has a free-trial period feature.

Check up Crunchbase

Robo-advisor SaaS Companies By Regions

Let's look closely at the Robo-advisor SaaS Companies in Canada comparing them by Province;

In Toronto, Canada, some of the Robo-advisor companies found are;

- WealthSimple

- NestWealth

- Find Bob

- Sterling Capital Brokers

- JustWealth

In Vancouver, some of the Robo-advisor companies to find are;

ModernAdvisor

Wealth Bar

Responsive

In Montreal, some of the Robo-advisor companies;

Moka

These are the major provinces in Canada with top Robo-advisor SaaS Companies

Robo-advisor SaaS Market Projections and Future Growth

The Robo-advisor market is still evolving and advancing. The ease towards investing created by these Robo-advisors has empowered retirees who are not experts at investments to engage. 

According to Statistica, the number of users is expected to amount to 4.670million users by 2027. 

Source : Spherical Insight

According to the image above, the growth of the Robo-advisory market is continuous and exponential. 

Robo-advisory market has come to make investments easier, and better and would encourage greater participation from investors towards financial freedom.

Conclusion

Robo-advisors have come to stay. These online automated software packages which play a vital role in achieving the financial goal of individuals, families and corporations cannot be undermined nor overlooked. All we can do is to understand it more, and embrace its ability to aid one towards the fulfilment of financial goals and financial freedom.