Vanguard and other large financial firms are gobbling up robo-advisor market share, squeezing out smaller firms that pioneered the industry, according to a new report.

The amount of assets managed by U.S. robo-advisors is poised to quadruple over the next five years, but independent digital advice providers are unlikely to benefit as larger, established firms attract the lion's share of the assets, according to the report by S&P Global Market Intelligence.

The report predicts that digital advice assets will grow from $98.52 billion at the end of 2016 to $460.46 billion at the end of 2021. While some companies, like WealthFront, Personal Capital and Betterment, continue to expand their business and increase their assets, traditional companies like Vanguard and Charles Schwab—the largest and second-largest robo-advisors in the U.S., respectively—and E*Trade are now the primary driver in robo-advisor asset growth, according to the report.

Researchers based their conclusions on a study of 31 companies identified as players in the robo-advisory space, including analysis of their SEC disclosures, quarterly earnings reports, transcripts and company contracts.

The robots are still a drop in the asset management bucket: The Investment Company Institute estimates that registered investment companies managed more than $19 trillion last year.

Nevertheless, researchers pointed out that robo-advisor assets are already rapidly expanding, more than doubling in 2016 from $47.35 billion at the beginning of the year to nearly $100 billion. The report projects that robo-advisors will experience a 46 percent jump in AUM this year, to $143.94 billion.

Despite all that growth, stand-alone robo-advisors are likely to lose out, according to the researchers:

“We think this is a troubling sign for the independent companies that have sprung up in the past few years, since top-tier institutions have demonstrated they can quickly build their own platforms and win customers,” said the report. “While the pioneers have undoubtedly made an impact, forcing the industry giants to offer lower-cost products and adopt digital models, it seems unlikely that the Davids can take on the Goliaths in same way that, for instance, Inc. and Netflix Inc. did.”


For example, Vanguard’s Personal Advisor Services offering attracted $7 billion in assets during its 2015 launch, growing to $51 billion in AUM by the end of 2016. In 2017, TIAA, T. Rowe Price, Bank of America Merrill Lynch and TD Ameritrade have joined the robo-advisor movement.

Established financial companies, like Vanguard, are not only developing digital platforms and growing assets more quickly, but they've also moved to create hybrid offerings by combining flesh-and-blood financial advisors with a robo-advisor, pressuring their digital-native competitors to follow suit, according to the report,

Adding to the pressure on independent firms, large banks such as Wells Fargo, Morgan Stanley and JPMorgan are also preparing to launch robo-advisors.