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Do robos benefit from the global lock-in?

Robo-advisory firms in Hong Kong and Singapore say so, though they have been reluctant to give many details.
Mid-adult woman having flu and working at home

As the coronavirus spreads globally, businesses have taken necessary precautions through flexible working arrangements or by requiring employees to work from home.

While this has led to standstill for a number of businesses or even job losses, robo-advisors in Asia seem to have benefited.

Kristal AI, which has operations in Hong Kong and Singapore, saw its weekly active users increase 21% in March to 5,100, which include new and current clients, from 4,200 in February, according to Vivek Mohindra, the firm’s Hong Kong-based co-founder. In total, the robo firm has 10,000 users and manages $100m in client assets, one-third of which is sourced from Hong Kong and the remainder in Singapore.

Interest in investing in the platform has also increased. Mohindra claimed that in February, Kristal AI’s website had 70,000 views, which compares to just 35,000 in January. This month alone, the website already has 79,000 hits.

“The overall picture is that more accounts are being opened and people are putting in more money,” Mohindra told FSA recently, but did not provide exact AUM details.

Meanwhile, robo-advisory platform Aqumon, which is powered by Hong Kong-based Magnum Research, had an increase in both users and new assets, according to Ken Shih, Hong Kong-based head of sales and marketing.

Without giving exact numbers, Shih claimed that mobile app downloads increased 16% during the first quarter from the full-year 2019. Net inflows also spiked 91% during the same period, he added.

Shih also declined to give AUM figures and the current number of users. As of January 2019, Aqumon had 5,000 users from Hong Kong.

Kristal AI’s Mohindra believes that with more people working from home, the easiest solution to managing investments is through an online platform.

“People have been at home and do not have much to do. [For new users], accessing an online platform is easier than visiting a traditional bank, which has been more difficult given the current situation. So online platforms have been a low-hanging fruit for people to try out,” he said.

“For those who have been investing in the platform for quite some time, they have [logged-on more frequently] as they have been more concerned about their investments given the higher volatility in markets,” he added.

Human element still important

Current users of the service are well-aware that Kristal AI is purely online, but they want to make sure that there is “someone” looking over their portfolios.

“For the few people who did want to speak to somebody, we did manage to have a human talk to them,” Mohindra said.

He acknowledged that the firm may not have the same kind of client-facing resources as a traditional bank would have. That is why for the first two user enquiries a Kristal AI representative will first reply via e-mail or a messenger app, such as Whatsapp. However, after the third enquiry, the representative will have to make a phone call.

“Some clients just wanted to have a conversation because they were stressed. What we learned is that [in times like this], it is still important to have a human element on the platform, even if we are a virtual wealth manager.”

Separately, wealth managers have stepped up their online communications efforts. Just recently, Standard Chartered launched “My RM” in Hong Kong and Singapore, which enables clients to quickly communicate with their relationship managers via the bank’s wealth management app.

Also this month, HSBC in Hong Kong introduced remote video conferencing services for its relationship managers to interact with clients remotely.

Still long-term

Given the anxiety of investors, Mohindra said that there have been a few account closures. However, he believes that since most users are not over 40 years of age, most of them have a long-term view of their investments and have preferred to remain invested.

“We have seen some accounts close, but nothing significant,” he said. While a majority of these users are just testing the platform, a few of them decided to close their accounts to have more cash in their bank accounts.

“Some people want liquidity back into their bank accounts, so it makes sense. We could have done a better job if we had offered a cash management solution, but I think we were a little late in offering a money market solution,” he said.

Magnum’s Shih also observed that Aqumon users have continued to be long-term investors.

Only 10% of Aqumon users have pro-actively turned down their risk profile this quarter and rebalanced their portfolios, he said.

“The majority of the remaining clients have followed the platform’s automated rebalancing instructions and maintained their current risk profile,” Shih said.

“Naturally, there were redemptions during this sell-off period, but it was less than 5% of Aqumon’s AUM.”

Part of the Mark Allen Group.