The rise of Robo advisors in Asia has always been a topic close to my heart. This was my first assignment for the Massachusetts Institute of Technology (MIT) Fintech course.

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  • Describe a trend in markets – Robo advisors;
  • Predict the broader implications of this trend for the thematic area in which it is currently relevant.
    What kinds of opportunities is it likely to lead to? What sorts of problems could it present or solve?

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Robo Advisors in Asia – Trend:

As a previous wealth manager, I believe that the traditional wealth management business is outdated and is in need of disruption. Robo advisors are growing at breakneck speed. The global AuM of Robo advisors is forecasted to reach $450 billion in 2020.

Many Gen Xers are wary of financial advisors, having gone through 2 financial crises in the last decade. The rise of Robo advisors can be attributed to millennials comfort with technology and distrust of financial institutions. For mass market consumers, face-to-face interaction is not as highly regarded as clients in the private banking sector.

Robo Advisors in Asia – Issues: 

Many Fintech companies are trying to disrupt the wealth management space, but there are no clear winners in Asia. This can be attributed to a variety of reasons: regulatory framework, slow adoption of technology and lack of internet security.

I believe most of these Fintech startups will fail due to the high acquisition cost of clients, intense competition and most importantly, the threat that banks will develop their Robo advisors. Funding from venture capital will eventually slow down, and many firms will consolidate or be acquired.

Robo Advisors in Asia – Opportunities:

The Fintech companies who will survive are the ones who can successfully convince consumers that they are:

1) secure and safe,

2) cheaper than engaging traditional advisors and

3) have the ability to ask questions whenever they want.

Hence, my belief is that hybrid Robo advisors, consultants who provide traditional advice but also manages money using automated wealth investment platforms, will have the highest chance of surviving.

Additional thoughts:

Due to the cutthroat competition on costs, and that the customers can easily find out information online to understand the business model of robo-advisors, it will become a fee-based model (as opposed to a % of AUM).

Possible evolution from the current stage of robo-advisory could be providing value-add services like a premium subscription to “contact a financial advisor”, analytics & subscriptions to sell-side reports, and integrating e-wallets + expanding to other financial product verticals like insurance and car loans (Alipay/TenCent are doing this).

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I’m NOT an expert in Fintech and am learning more to acquire knowledge and be part of the revolution.  Happy to hear your thoughts and have more contributors to the Fintech space.

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6 COMMENTS

  1. Who are some of the rising players in this space in Asia? Smartly is soon launch, any other notable companies to mention?

  2. […] roboadvisors in Asia are growing in popularity. This means that you can develop an entire investment plan within a few […]

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