The venture capital investors financing the robo-advisors are starting to fret over the numbers. Betterment raised $100 million in VC money in March, but it is the only robo-advisor that has successfully tapped the market for more money this year.
Many analysts believe the window to access additional capital is rapidly closing on stand-alone robo-advisors, and without it they won't be able to build enough scale to survive.
"The robo-advisors will leave a lasting legacy in the wealth management industry, [and] they've prompted a lot of changes at advisory firms," said Wong, who issued a prescient report on the robo-advisors last March. "But there will probably be just a couple of stand-alone firms that survive, another handful will be acquired, and we'll see a lot of failures."
The legacy will be a near-universal rollout of robo-advice technologies by incumbent players in all distribution channels of the advisory industry. UBS, the world's largest wealth management firm by global assets under management, is the latest major firm to take the plunge.
It signed a deal with Silicon Valley–based robo-advisor SigFig on May 16 to put SigFig's digital tools in the hands of UBS's more than 7,100 financial advisors in the United States. Details of the deal were not disclosed, but UBS made an equity investment in SigFig, and the two have created a research group to develop new wealth management technology tools for UBS advisors to use.