Trend Alert: The Utilisation of Robo-Investors in Asset Management

Trend Alert: The Utilisation of Robo-Investors in Asset Management

01-Aug-2019 by Claudia DeFabio

According to an article written by PWC, asset and wealth management trends are growing rapidly, which ultimately gives consumers more opportunities to take charge of their finances. The shift of power to investors is accelerating, pushing down pricing for asset managers and wealth managers alike. Therefore, as low-cost products gain market share and larger players benefit from scale economies, there will be further consolidation and new forms of collaboration. 

Asset and wealth managers have been filling the financing gaps resulting from the Global Financial Crisis. Their involvement in niches such as trade finance, peer-to-peer lending and infrastructure will dramatically increase.

Investors want specific outcomes rather than style-focused funds. Active, passive and alternative strategies have become building blocks for multi-asset, outcome-driven solutions. As a result, firms must either have the scale to create multi-asset solutions or be content as suppliers of building blocks.

With the progression of technology within the industry, robo advisors are steadily emerging into the asset and wealth management services. Robo advisors are digital technology that provides financial advice and investment services based on algorithms. The main advantage that robo advisors have is that they are much cheaper than that of human advisors, cutting labour costs, making them more accessible.

One unique company that has embraced the use of robo advisors is TradingValley. This startup uses robo advisors to generate a number of financial portfolios based upon certain market and investment trends. The consumer is then led towards what portfolio would best suit their lifestyle based on their needs and wants. 

Co-founder Jaga Lee explains that the company focuses on using the Robo advisors to create strong portfolios so that the end consumer can have multiple routes that can best benefit their financial desires. “By using these robo advisors, we can provide more services at a faster rate and a lower cost than that of human advisors” Lee states.

Financial services are constantly growing and continue to change. Firms not acting upon these windows of opportunities created by new trends are falling behind. The time for action in this industry is evident, as laggards are losing their power and their market share. Similar to how asset managers find ways to put assets to their best use, businesses must take these new trends and put them to their best use, utilizing the revolution of the industry.

Claudia DeFabio