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Robots are here
The rise of robo-advisers in Asia Pacific
Robo-advisory is fundamentally challenging incumbents in the wealth management industry by disintermediating traditional wholesale distribution channels.
For Asia Pacific clients, robo-advisory offers ease of use, convenience, and affordable fees, as an attractive alternative to low-interest savings accounts for those who prefer to employ a “hands-off” approach towards investing. Given these characteristics, robo-advisory services are likely to be the most attractive for Retail and Affluent customer segments in Asia Pacific.
High Net Worth Individual (HNWI) investors, on the other hand, are unlikely to be the key target market for pure-play robo-advisory services, as their larger appetite for risk and desire for control mean that they are likely to continue to prefer to make self-directed investments. Rather, the winning strategy for HNWI investors is likely to be a hybrid robo-adviser model – one that combines a superior digital experience with qualified, human-led advisory services.
However, several challenges remain. These include data privacy and cyber threats, as well as issues related to the size of investments and the deep expertise required to develop and manage robo-advisory competencies in an environment with many legacy IT systems.