The Rise of Robo-advisors in Asia Pacific Region
Robo-advisory in the Asia Pacific region is continually growing; on the other hand, traditional wholesale distribution channels have been disrupted, primarily due to the rise of digitally savvy, self-directed investors. Re-evaluate and modernize existing operating models have become urgent needs as the prototype of wealth management is shifting from human intervention to digital-based. Generation Z and millennials heavily reply on the digital sales channels—and thus— the rise of robo-advisors in the next few years cannot be underestimated.
For generation Z and millennials in Hong Kong, as well as those in Asia Pacific, robo-advisory comes in handy as it offers convenience, personalized service with affordable fees. Compared to North America and Europe, Asia Pacific has a relatively lower charge fee due to its lower cost structure. Although the AUM in Asia Pacific is not as high as in North America, robo-advisor users in Asia Pacific has reached 17.9 million in 2018, which is double the number of users in North America and Europe combined together.
In addition to the growing target segment, the shift from bank-centric to client-centric platforms also motivate the development of robo-advisors. In contrast to bank-centric system, robo-advisory places clients at the center of every decision they made and creates tailor-made portfolios for users.
Source: Deloitte, The rise of robo-advisers in Asia Pacific
According to a variety of analysts, there are approximately $398 billion in AUM at the end of 2019, but this number was expected to rise to $830 billion by 2024 (insider).
There should be no doubt that robo-advisory service will increase steadily in the next few years. However, if we look at the wealth management industry in Hong Kong, the adoption rate of robo-advisory relatively low compared in North America. Robo-advisors such as Betterment, Wealthfront, and Vanguard Personal Advisor Service have been taking an outsized share of investment growth in the US.
Source: Statista 2021
Robo-advisors in Asia, by contrast, have not yet gone mainstream. According to the report of top 4 robo-advisor in Asia by Kaplan, there are several concerns must be address in order for users in Asia to consider robo-advisors: lack of trust and understanding of algorithms, users’ unfamiliarity of different market portfolio construction models, and uncertainty and the lack of transparency of robo investment.
In Asia, robo-advisors usually appear in two forms – as a main advisor and/or in some cases, collaborate with wealth managers as a support role for portfolio construction or optimization.
Australian robo-advisor,(previously Acorns) launched their app in 2016. As of the end of March, the platform has A$371.5m ($306.7m) in AUM, according to an exchange filing.
Raiz invests the spare change from your purchases
Option to top up your investment account with scheduled amounts or one-off lump sums
The portfolios are constructed using ETFs quoted on the Australian Securities Exchange
AGDelta, Singapore-based B2B2C FinTech firm. The company connects the financial products supply chain, facilitating the flow of information between financial product suppliers, and buyers, in the wealth management industry – through one platform. AGDelta is one of the largest B2B financial investment platforms in Asia, handling over USD$1.5 trillion worth of financial investment product transactions.
Employs Artificial Intelligence (AI) and data analytics to enable the identification of more relevant investment opportunities, and leverages RegTech to address compliance in 15 market jurisdictions, removing barriers to investment and ensuring suitability and appropriateness across complex cross border settings.
AGDelta Digital Advisory focuses on the concept of customer centric workflow; wealth advisors are able to filter and match all investment research and product ideas based on each customer’s unique risk profile.
5nance is India’s leading robo-advisory platforms; it enables users to plan their investment in mutual funds, loans, taxes and insurance well.
Provides financial advisory service without charging any fees. The portal will distribute investment products like mutual funds, insurance, FDs, gold, bonds, equities, loans, credit cards etc.
Robo-adviser startups in South Korea saw their funds increase by more than 1 trillion won ($896.7 million) in a year, according to The Korea Herald. Fount is a robo-advisor company that offers customized financial portfolios, tailored to each customer via machine learning technology and asset allocation algorithms. Fount was found to have recorded the largest volume of management funds with 807 billion won. The total number of the surveyed robo-investing operators’ clients soared from 9,900 to 66,897 in the given period, with Fount posted with 12,529.
Its robo-advisor engine Bluewhale calculates the optimum combination of assets by combining financial engineering technology with asset allocation theories.
Bluewhale then monitors the financial markets around the globe, allocating assets based on market changes through dynamic rebalancing.
Hong Kong-based robo advisory firm Magnum Research launched Aqumon in 2018 for retail investors and has since gathered 5,000 clients in Hong Kong, with an average investment of HK$200,000 ($25,498) from each investor.
It says the app has experienced more than 300% growth this year, compared to 2019; this growth is based on app downloads, account openings, and funds transferred to Aqumon accounts.
·Outsources to AIA Hong Kong, Bank of China International, Guangzhou Rural Commercial Bank, China Resources Bank, and ChinaAMC.
More than 100,000 investors are using it. Fuguo, a digital brokerage platform for self-directed investors established in 2014, provides customized suggestions, and has made complex financial reports, technology and other research work neat and focused. Being the top robo advisor in Taiwan, they have successfully raised 50000K/TWD.
Provide a simple, intuitive and personalized investment research space and a personal messenger bot. Saves users more than 45% of their time and allows them to make better investment decisions.
IPYGG app as Hong Kong's first platform to leverage AI and open banking to provide personalized investment advice, aim to become the millennials' & Generation Z no.1 finance assistant – with the focus on inclusive finance management and a feature of personalized investment. iPYGG is an all-in-one money management platform that helps users to aggregate financial accounts, and Ai provides the best fit investment portfolio with 6-31% annual return and reduce your credit card loan interest by 80%.
Once connecting bank accounts (by our robots rather than using bank api), users can manage multiple accounts in one place. Ai will process the user's financial information, advise the tailored investment strategy and reduce loan interests. Particularly, the average interest rate of the credit card is over 30% and millennials own more than 5 credit cards. Ai compares the balance transfer plan in the market via Open Banking and provides a better rate to users that will significantly reduce their interest rate for ~80%.
Meanwhile, users can bind their credit cards in our platform for auto save & invest. which is the way users save extra while spending with the linked credit cards. It rounds up the purchase amount to integer and saving the spread in iPYGG. The amount in iPYGG can be transferred into the robo advised portfolio investing in US ETF market.