In an era of uncertainty, managing investment risk and diversifying portfolios effectively is always a welcome strategy. For retail investors who often face challenges in getting the right advice to achieve this, digitalisation provides a lot of benefits.
“Because of technological advancements and the lower cost of automated services, digital wealth management platforms have emerged as solutions for retail investors,” said Clara Chiu, head of the fintech unit and director of licensing at Hong Kong’s Securities and Futures Commission (SFC).
Firstly, she explained at an event hosted by AQUMON, such digital platforms generally allow individuals to invest in a variety of financial markets and products at a lower cost compared with conventional channels. This can promote financial inclusion.
In addition, apart from participating in investment activities, some digital platforms provide information such as news and recommended strategies. This helps less sophisticated investors make more informed investment decisions and, hopefully, generate better returns.
Lastly, the minimum investment thresholds on digital platforms are usually lower than traditional methods. Given the lower levels of liquidity among retail investors, digital wealth platforms can therefore encourage more idle cash in banks to find a home in investment markets.
Looking ahead, Chiu said she hopes to see more good-quality digital wealth management platforms in Hong Kong.
With innovations and higher technology literacy, Chiu believes such platforms will continue to grow.
“Firms are investing heavily in data and advanced analytics, potentially broadening their services and the range of products they can offer in the future, and improving the quality of advice,” she explained.
“This means digital wealth services can become more personalised in the future and deliver better investment outcomes to investors.”