The Revolution and Expansion of Robo-Advisory in Wealth Management

The Revolution and Expansion of Robo-Advisory in Wealth Management


It is necessary to look at the definition of traditional wealth management. Wealth management combines several practices such as personal investment management, financial advisory and planning, disciplines directly for the benefit of high-net-worth clients.

However, Robo-Advisory in Wealth Management nowadays has become more and more popular. There are around 100 Robo-Advisors in 15 countries. Estimates for the future Robo-Advisory market by several well-known institutes predict between $2.2 and $3.7 trillion in assets managed by 2020.

Various reasons lead to this outcome. First of all, since there are still many uncertainties worldwide in 2017: ongoing Brexit negotiations, the effects of the Italian referendum and a new presidency in the US will all contribute to market volatility.

Second, after the financial crisis of 2007-2008, financial institutions are gradually losing credit and trust from the public. Consequently, it costs huge for financial institutions to update system and internal control regularly. According to Martin Arnold of the Financial Times, “Big banks, such as HSBC, Deutsche Bank and JPMorgan, spend well over $1 billion a year each on regulatory compliance and controls. Spanish bank BBVA recently estimated that on average financial institutions has 10% to 15% of their staff dedicated to this area.”

Third, because companies use computer algorithms to manage client investments, robo-advisors can offer their services for a fraction of the cost of a human financial advisor. That lower-cost management, combined with features like automatic portfolio rebalancing and tax-loss harvesting, can translate into higher net returns for investors.


Digital Wealth and Financial Innovation: Robo-Investing

Robo-advisors are online wealth management services that provide automated, algorithm-based portfolio management without the need for human financial planners.

Personal financial management (PFM) first made a name for itself in retail banking, but with many banks failing to provide anything more than categorization of spending, the potential was not fully realized. PFM tools are making a comeback though, this time in wealth management. PFM tools are designed to help both wealth managers and their clients monitor facets of financial performance. High-net-worth clients expect world-class customer service and the composition of their wealth is often complex. As such, wealth managers require sophisticated platforms to effectively communicate and provide custom reporting for their clients through secure channels. PFM providers enhance automation-based investment management services and digital interactions with a more human touch. It is clear that the wealth management industry has learned from the mistakes made by many retail banks.

Based on a survey from global Distribution & Marketing Consumer research by Accenture, which includes nearly 33,000 consumers in 18 countries and regions, found that the majority are willing to receive exclusively robo-generated advice for certain banking and insurance products. Consumers are now open to robo-advice to help determine which bank account to open (71%), which insurance coverage to purchase (74%), and how to plan for retirement (68%). Nearly four out of five (78%) consumers said they would welcome robo-advice for traditional investing, where the technology first emerged. Consumers indicated the main attractions for using robo-advice platforms is the prospect of faster (39%) and less expensive (31%) services, and because they think computers/artificial intelligence are more impartial and analytical than humans (26%).

Robo-Advisors are able to translate client requirements into investment logic such as risk appetite or liquidity factors and propose various investment opportunities for the clients. The graph below shows a four-stage evolution of features and services can be outlined.



Five Groups Use and Benefit from Robo-Advisors

1). Registered Investment Advisors (RIAs) and Financial Advisors: they have a fiduciary responsibility to their customers to ensure they provide the best financial advice and act in the best interest of their clients.

2). Millennials: robo-advisors offer cheaper fees than human advisors, which also makes them attractive to this group.

3). Retirees: as the Baby Boomer generation ages and enters retirement, robo-advisors have become more attractive to them.

4). High-Net-Worth Individuals (HNWIs): 49% of HNWIs around the world would consider using an automated advisor, it is expected to occur in the next few years.

5). Outside Investors: robo-advisors begin to manage more global wealth; more investors would benefit from allowing these automated services manage their wealth.


Smartpis Platform for Robot Financial Investment Advisor

We plan to offer a financial investment advisory service to both companies and individuals through an automated platform. This platform will offer investment advice but will also be assisted by experts for specific value-added tasks. Our goal is to market this business project in Europe, the Asian Pacific and the Middle East.

Our platform is currently under construction and will soon be operational.


Please feel free to discover more information at our website:

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AuthorYimeng NING


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