Robo-advisory development challenges
The study also noted that both China and India ranked highest in terms of the willingness of investors to use robo-advisory platforms.
A survey of 300 Asian investors conducted in 2016 revealed that 70% of Indian respondents said they were willing to use robo-advisors, followed by 64% in China, Korea (56%), Taiwan (50%), Hong Kong (40%) and Singapore (39%).
However, intended allocations in robo-advisory are small for both the China and India markets. More than 10% of both Chinese and Indian investors said they would entrust just 19% and 16%, respectively, of their assets to robo-advisors.
One of the obstacles to the development of robo-advisors is their ability to assess risk-return profiles.
“Their risk profiling practices are not robust enough to build adequate risk profiles of investors, who are more sensitive to returns than risk,” the report said.
Although robo-advisors are offering services in some Asian countries, India, China, Hong Kong and Singapore lack a regulatory framework for their operation.
However, the Monetary Authority of Singapore released a consultation paper in June that should promote the adoption of robo-advisors.
Hong Kong’s Securities and Futures Commission also released a consultation paper in May last year, which proposed additional protective measures for selling complex products via online distribution platforms and for providing robo-advisory services.
The SFC has also been receptive to meeting with robo-advisory firms that are interested in understanding more about regulations, Christina Choi, the regulator’s executive director for investment products division, said previously.
