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Report: China’s ‘intelligent WM’ assets to triple by 2022

However, a majority of investment recommendations made by digital platforms do not match investors' needs.

China’s intelligent wealth management sector has grown 10x over two years — to RMB 254.7bn ($37.02bn) in 2018 from RMB 30bn in 2016, according to a white paper released by online wealth management operator Lufax and I-Research. Assets are expected to nearly triple to RMB 737bn by 2022.

According to the paper, intelligent wealth management services make use of artificial intelligence, big data and machine learning to provide investors with financial services.

Besides Lufax, other providers of intelligent wealth management services include Ant Fortune. Last year, the firm launched Caifuhao, which allows third-party financial institutions to sell investment products directly to investors inside the Ant Fortune investing app. Caifuhao recommends financial products based on an investor’s risk profile, as well as providing investor education services.

The rise of such services could address a number of issues in China’s wealth management industry, including possible conflicts of interest, such as service providers favouring the distribution of high-commission products, according to the paper.

However, the white paper noted that the intelligent wealth management sector needs far more improvement in order to gain widespread acceptance.

For example, around 92% of surveyed investors had to transfer to human operators because robotic systems could not understand them. In addition, 78% of recommendations do not match with investors’ needs.

“Many services lack risk matching or only provide very rudimentary risk matching through the use of a one-time questionnaire,” the paper said. It suggests that providers of intelligent wealth management services should caution their customers when they attempt to select products that do not match their profile. They should take into account their KYC information and the products in which they have already invested.

The paper also recommends that services should include more information on asset allocation and product comparison, as the majority of providers only provide basic product information.

Lufax is the financial services arm of insurance company Ping An. The firm launched an online platform for accredited investors in Singapore last year.

Part of the Mark Allen Group.