Robo-advisers continue Asia momentum

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Despite arguments that HNWIs want only people to manage their wealth, robo-advisories in Asia are going after a client base that overlaps with wealth managers while some big banks are integrating robo into their advisory services.

Robo-advisers continue Asia momentum

Steven Seow, head of wealth management for Asia at Mercer, said that robo-advisory services are not exactly competitors for wealth managers, although some have been trying to win clients from them.

“We are seeing take-up in both retail and high-net-worth segments,” Seow said. “Asian investors are price-sensitive so they would consider robo-advisers to manage part of their assets.”

Robo-advisors often manage part of their portfolios via exchange-traded funds and Seow said those investors who were moving away from active to passive strategies could find robo- advisors more appealing.

Asian HNW interest in robo-advisers seems to  be strong. According to the Asia-Pacific Wealth Report 2016, published by Capgemini, of the HNWI surveyed in Asia-Pacific incl-Japan, 79.6% would consider turning to robo-advisory compared to about 65% in the rest of the world. 

In addition this group had the highest amount of wealth ($17.4trn) globally in 2015 with a forecast to reach $42trn by 2025.

Robos behind the scenes

Robo-advisories announced in Asia recently include Bondit, which is looking at China bonds; Algebra, which is Shariah-compliant; Bento, a human/robo combination service; and Hedgeable, targeting young professionals.

However, Sudhir Nemali, chief operating officer for Asia-Pacific at Deutsche Bank Wealth Management, said robo-advisory has had little direct impact on wealth management.

“This aspect of relationship management will continue to remain in the domain of humans as it requires a personal touch,” said Nemali.

“High-net-worth clients continue to strongly value the interaction with their relationship managers and client advisers to validate their investment portfolios and seek guidance on various wealth management options.”

Deutsche Bank Wealth Management is nevertheless using these technologies.

Nemali said there was an impact “behind the scenes” because robo-advisory was already being used to provide quantitative analysis to human client advisors and relationship managers to support them in managing client portfolios.

Moreover, the technology is being used to design specific products to achieve a particular investment or portfolio goal of a client.

“We appreciate that the rise of robo-advisory is potentially very disruptive in some of the other wealth segments and will be keeping a close eye on the features being built to see how they can be used in enhancing our wealth management capabilities,” Nemali said.

Crossbridge Capital, a wealth manager with an office in Singapore, launched its digital advisory platform, Connect, earlier in 2016. Charlie O’Flaherty, the firm’s head of digital strategy and distribution, said that while robots could not fully replace traditional wealth management services there were still opportunities.

“Based on our understanding of the market, investors as a whole are leaning towards digitalisation, especially the younger generations who are starting to undertake transfers of wealth,” O’Flaherty said.

“This generation is made up of smart shoppers, who are more inclined [than their parents’ generation] to utilise a hybrid approach by engaging both digitally and with a traditional wealth manager.”

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