The smartphone function, called “Be Advised”, has been offered to BNP Paribas’s MyAdvisory clients in Hong Kong and Singapore since the second quarter this year, according to a spokesman.
Access is via the firm’s myWealth e-banking app, and customers will be shown investment portfolio recommendations derived from BNP Paribas’s internal methodology and based on the customer’s risk profile. This digital feature is available exclusively to its clients under their contractual advisory offering, myAdvisory.
In addition, the myAdvisory service can optimise portfolios for better risk-adjusted returns.
The technology of the BNP Paribas’s “portfolio optimiser” is built on arbitrage pricing theory, which is a model based on the idea that an asset’s returns can be predicted using the linear relationship between the asset’s expected return and a number of macroeconomic variables that capture systematic risk.
It supposes that economic and financial factors, such as changes in inflation rates or shifts in risk premiums and price-earnings ratios can help explain expected returns and provide an estimation of assets’ theoretical fair prices.
The BNP Paribas portfolio optimiser methodology first applies the bank’s strategic asset allocation views and secondly identifies proposed investments within the bank’s investment universe. The aim is to propose a diversified portfolio in line with a targeted value-at-risk, and incorporates both historical data and the bank’s forecasts.
The available financial instruments cover most asset classes and are regularly updated to reflect changes in the tactical and strategic views, according to the bank.
Other wealth managers in the region, including Citi, DBS, Deutsche and UBS have similar digital products, and most are upgrading their mobile phone services as they fight off the challenge from robo-advisors and fintech companies.
Earlier this week, Lu International, a subsidiary of China online wealth management firm Lufax, launched a wealth management mobile app in Hong Kong. It offers a selection of Hong Kong dollar-based mutual fund products and transaction fees for all products are waived for a limited time.
Nevertheless, traditional wealth managers are fighting back. A recent survey by St James’s Place, found that almost all respondents in Hong Kong and Singapore valued face-to-face meetings with their financial advisors.
Meanwhile, in China, Tencent rolled out a fund advisory service called “Invest Together” this week. It is accessible through Wechat, the firm’s social media application, and was in response to the China Securities Regulatory Commission pilot scheme announced in October that marked its preference for a shift to a fee-based model of selling fund products.
Another online distributor, Ant Financial, launched the “Help you to invest” service with Vanguard in April this year.
