This article aims to describe and analyze the most important developments in the Robo Advisory market in Germany for the year 2018. But to start, see the most important events occurred from 2009 to 2017 aggregated in the following figure:
As one can see, before 2017 there barely was an interesting event accept for the launch of several Robo Advisors over the years. As one can see, this begins to change in 2017 and drastically in 2018, where a lot of impactful cooperation were agreed on and milestones were reached. The following figure shows the aggregated most important events and developments happened in 2018. For further reads please see the attached list of sources.
The most important happenings are listed in chronological order in the table below. Categories that were included are regarding launches, cooperations, performance indicators as well as relevant service adjustments.
The year 2018 has been exciting in the realm of digital wealth management in Germany. Just in 2018 alone, 13 new players or services entered the market — more than ever in a single year. Furthermore, did more cooperation’s between Robo Advisors happen than in the last couple of years combined. The nature of such cooperation is mostly regarding sales, whereas the Robo Advisors profit from an inflow of new customers and related assets to be managed through the cooperation partners (banks, financial institutions, financial advisors etc.). By offering the digital wealth management solution of the Robo Advisor to their customers, the cooperation partner extends its own service range and furthermore gets profit shares from successful imparting.
The overall development therefore led to a strong general market growth and a deeper penetration of the German market. By the end of 2018, the overall market volume likely exceeded 3 billion Euro In assets under management, whereas the growth rates are expected to be between 200 and 300 million per month. By the end of 2019, the overall market size can be expected to be between 5 and 7 billion Euro. The German market is dominated by Scalable Capital that manages a large portion of the assumed 3 billion Euros invested in Robo Advisors by end of 2018. This development was strongly supported by the cooperation with Siemens Financial Services and especially with ING DiBa. The ING DiBa cooperation alone generated over 20.000 new customers and more than 500 million Euro cash inflow (as of May 2018). This shows the high importance of such cooperations between Robo Advisors and other actors of the financial sphere. The top four Robo Advisors regarding assets under management in 2018 were:
1. Scalable Capital — over 1 billion Euro (as of May 2018)
2. Cominvest — over 350 million Euro (as of October 2018)
3. LIQID — over 260 million Euro (as of July 2018)
4. Quirion — over 148 million Euro (as of October 2018)
Besides the upcoming of a large number of new players and cooperations, other interesting developments occurred regarding asset under management marks reached, performances and the cessation of business by Werthstein — a Robo Advisor that just started its service in January the same year and the second one closing its business after Cashboard in general. The most relevant AuM marks reached are stated in the table, but since the performance is hard to picture due to the wide variety of possible portfolios and timeframes, please see the following performance tests if you are interested:
It is furthermore to notice, that several Robo Advisors adjusted their services and allow a more specific allocation — for example in sustainable portfolios (True Wealth, Vividam), Private-Equity-Fonds (LIQID) or such specifically related to women (VisualVest). Since more players are getting into the market, such adjustments can help to differentiate one’s own product and service from that of the competitors. Other adjustments are for example made in regards of added possibilities for personal advice (Scalable) or through new options regarding company pension schemes (Fintego).
However, the ambitions to expand the own service abroad were apparently very low in 2018, since only Whitebox (Austria) and Scalable Capital (Swiss) did so. But it can be expected that this will change in the near future due to unused potential in the markets abroad. The year 2019 will likely have less new Robo Advisors entering the market and maybe first signs of consolidation of the market. However, the overall assets under management will increase strongly, whereas new cooperations will arise.
No legal or investment advice
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Kai Lorberg is a FinTech Lead Analyst at micobo GmbH. He can be contacted via e-mail (email@example.com).
Sources and further information: