Assets under management by robo-advisors have surpassed 1 trillion won. A robo-advisor is a portmanteau of "robot" and "advisor," referring to a service that uses computer algorithms to automatically build an investment portfolio tailored to a customer's risk profile and goals.
In particular, assets under management by discretionary robo-advisors that fully take charge of retirement pensions are growing quickly. With retirement pension returns sluggish, investors uncertain about direct investing are seen choosing robo-advisors.
According to the Koscom Robo-advisor Testbed Secretariat on the 5th, as of the end of August this year, the total amount managed by commercialized robo-advisors stood at 1,057.45 billion won. That is an increase of about 170.7 billion won over the past year. After first surpassing the 1 trillion won mark in May this year, it has continued to rise.
By service type, the "free recommendation type" is the largest at 622.36 billion won (58.9%). This means banks use robo-advisors to sell fund products, and a passive format still accounts for a large share.
Recently, as securities firms, asset management companies, and discretionary advisory firms in the financial investment industry have actively moved into robo-advisor services, the amount managed under the "discretionary" type has also swelled to 430.7 billion won (40.7%). Comparing growth in managed amounts over the past year, the discretionary type increased by about 120 billion won, outpacing the free recommendation type (50.7 billion won).
A major factor was the financial authorities allowing the use of discretionary robo-advisors in individual retirement pension (IRP) accounts through designation as an innovative financial service (regulatory sandbox). The annual subscription limit is 9 million won.
The industry believes more customers are choosing discretionary robo-advisors because individual retirement pension returns have been relatively weak. The average annual return for IRP accounts over the past five years (2020–2024) was 2.9%, on par with deposits and installment savings. Only the top 10% of accounts by return recorded double-digit average annual returns. Most invested in principal-and-interest guaranteed products or tried direct investing but fell short of expectations.
Robo-advisor investment performance was better than individuals' direct investing. Robo-advisors are broadly divided into three categories by risk preference: "stability-seeking," "risk-neutral," and "aggressive." Based on 170 commercialized retirement pension robo-advisors, the average return for the past year was calculated. Even the stability-seeking robo-advisors, which have a relatively high share of safe assets, posted an average return of 8.95% over the past year, outpacing general investors' performance.
For example, in the case of "Fount_Tech & High-end (ETF)," which invests in U.S. tech companies and global high-end consumer goods, the past one-year return for the stability-seeking category exceeds 8%.
Robo-advisors that increased the share of risky assets performed better. Over the past year, the average return was 12.4% for risk-neutral and 16.07% for aggressive.
In the aggressive category, Samsung Securities' "Samsung Retirement Robo ETF type_P" was best with a 55.37% return over the past year. It was followed by NH Investment & Securities' "NH_DNA Retirement Pension_Econex_P" at 48.95% and Mirae Asset Global Investments' "M-ROBO My Gold Asset Allocation_ETF_P" at 46.24%.
Of course, entrusting funds to a robo-advisor does not mean losses will not occur. Since inception, the average maximum drawdown from the peak for aggressive robo-advisors was 11.3%. There were also cases where the maximum drawdown approached 25%.
Given the nature of retirement pensions, experts advise approaching them as a "long-term investment." A financial investment industry official said, "It is difficult in reality for individuals to rebalance retirement pensions, which must be managed over a long period, in a timely manner," adding, "In terms of cumulative return, robo-advisors were better than individuals' direct investing."