AUM in Europe’s Robo-Advisors Market to Reach $1.29 Trillion by 2027

Bas Kooijman, CEO and Asset Manager of DHF Capital S.A., cites that assets under management (AUM) in the robo-advisors market in Europe are projected to reach approximately $794.40 billion in 2023 and show a compound annual growth rate (CAGR 2023-2027) of 12.80% to result in a projected total amount of about $1.29 trillion by 2027. With this forecasted growth on the horizon, Kooijman shares insights on why the future of wealth management will rely heavily on robo-advisors.

Employing mathematical algorithms to provide sound financial advice, robo-advisors have become increasingly sought out in Europe with 61.70 million market users expected by 2027. This impending uptick in investors who seek to leverage the power of algorithms to grow their investments can be attributed to several factors including lower fees and a higher return on investment (ROI) than that of human advisors or the traditional banking system with most robo-advisors charging roughly just 0.25% per year.

The launch of Chat GPT, which registered five million new users on the day it was released, is also contributing to this investment market renaissance. More people are realizing the advantageous use cases of AI across all industries. This world-revolutionizing technology is witnessing increased adoption and implementation across Europe while the nation simultaneously strives to boost research and industrial capacity but also safeguard citizens’ fundamental rights.

Furthermore, data shows that if Europe on average develops and diffuses AI according to its current assets and digital position relative to the world, it could add some $2.92 trillion, or 20%, to its combined economic output by 2030.

Bas explained: “Algorithms and algorithmic methods have been with us already now for a very long time, and AI is now reshaping how consumers and companies alike access and manage their finances. With predefined rules, computers can be programmed to explore markets for the benefit of clients and when those rules match reality, an alert can be issued to a portfolio manager to help them further minimize risk and maximize profit. This automation essentially provides security while enabling a portfolio to maintain a high-class liquidity level.”

For traders, algorithms have the potential to make thousands of trades per second if set right; a 2019 study showed that around 92% of the Forex market was performed by algorithms, rather than humans. Bas’ securitization firm, DHF Capital, has leveraged the power of algorithms to provide investors in the region, and across the globe, with an annual average ROI of 20% since its inception; investors who have worked with him since the company’s inception have witnessed a 114% ROI, more than doubling their initial investment.