Getting a line of #credit from a bank is so passe — try a wealth management #service with a #robo-advisor. Wealth management company Wealthfront has just released its new Portfolio Line of Credit, an offering that will allow clients to borrow funds based off of their investment accounts. The mobile-based service &8212; which marks the […]
Bank Innovation
BMO Bank has been “heavily” investing in its #technology architecture for the past five years. The bank reached a “major milestone” at the end of 2016, according to David Gordon, the bank’s U.S. chief technology and operations officer. “That’s in terms of all the tech capabilities we have built, which willRead More
Bank Innovation
With 23 #robo-advisors, Germany is Europe’s most #crowded market when it comes to automated, algorithm-based portfolio management advice services.
According to reports from Techfluence, there are currently some 64 robo-advisors in Europe, with the two predominant markets being Germany and London, with 23 and 13 platforms respectively. The two locations are followed by Zurich and Paris, with four platforms respectively.
In Germany, the rise of robo-advisory has been largely fuelled by incumbents which have been deploying numerous products to serve retail investors. Notably, the launch of VisualVest by Union Investment was one of the first independent moves by one of the established institutions into the robo-advisory field.
Launched as a corporate startup, VisualVest provides a platform offering retail investors access to more than 13,000 investment funds via 14 different portfolios: the so-called VestFolios.
Other examples include Fintego, a service provided by Commerzbank&8217;s subsidiary ebase, as well as comdirect, which started offering automated portfolio advice as well.
As for Deutsche Bank, the financial institution has entered into a cooperation with FinCite to offer its maxblue AnlageFinder. AnlageFinder offers a selection of securities in the respective asset class based on criteria selected by the client, such as rating, product costs and performance.
In the space, Germany&8217;s prominent players include Cashboard, Scalable Capital, Vaamo, and Growney, among others.
Not far from Germany, Swiss bank UBS is set to launch a new online wealth manager in Britain in early 2017. The service, called SmartWealth, will target a younger audience.
UBS is the largest wealth manager in the world, managing US$ 2 trillion in client assets. Initially, UBS SmartWealth will be available to a small number of UK residents.
UBS&8217; Shane Williams, the co-head of UBS SmartWealth, told Business Insider in a recent interview that the decision to launch in the UK was influenced by the relative high affluence of the population, favorable local regulation and the advice gap.
But the firm plans to expand internationally in the future.
“We&8217;ll look at where the best places in the future are to go but we&8217;ve not decided yet. But the design of the platform is there ready to move, whether that&8217;s language or different regulatory requirements,” Williams said.
UBS SmartWealth was created especially for those who don&8217;t meet the £2 million asset minimum of UBS&8217; current wealth management clientele. With £15,000, an investor can sign on to SmartWealth. Similarly to other robo-advisors, the platform culls the investor&8217;s goals, assets and risk threshold before suggesting an investment portfolio.
One of UBS SmartWealth&8217;s unique features is that the platform offers users a choice between an active or a passive investment approach. The active approach scours the globe for investments and strives to outperform the market. This strategy makes changes based upon UBS corporate research that includes economic and other factors. The passive approach employs lower cost UBS index tracker and smart beta funds.
As of the fees, UBS SmartWealth is set to charge 1.7%! of assets under management for the actively managed approach and 1%! for the passive one.
It took a year to build the SmartWealth platform, Williams said. Today, the team is made of 80 people based in London.
&8220;What we tried to do with SmartWealth is to be like a #fintech, to go at that pace but within a large organization,&8221; said Williams. &8220;It&8217;s trying to get the best of both worlds.&8221;
UBS is one of the numerous #banks that are looking to tap into the growing popularity of robo-advisors. In the UK, still, Barclays has recently launched a digital investment product that promises lower fees than historical investment services. Lloyds and Santander UK are also reportedly developing their own robo-advisors.
UBS also formed a strategic alliance with US based Wealth management #technology company Sigfig in May 2016.
The post Germany&8217;s Robo-Advisory Sector Is Getting Crowded appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
#Robo-advisors are causing an uproar and the #wealth management industry needs to #adapt to this new #environment, says Morgan Stanley, one of the largest wealth #managers on Wall Street.
According to Michael Cyprys, an equity analyst at the firm: “The rising threat from robo-advice leads financial advisor’s role to evolve: greater focus on financial planning, embracing digital tools such as robos as a means to become more efficient; pairing human and machine.”
&8220;Digital capabilities become increasingly more important as Millennials are more digital savvy than previous generations which is transforming the investment and wealth management landscape; innovative new entrants such as Robos could take share,&8221; Cyprys wrote in a note earlier this year.
A survey conducted by Morgan Stanley found that 58% of Millennials and 50% of Generation X are interested in using robo-advisors.
Robo-advisors, or automated digital wealth management solutions, have attracted about US$ 50 billion in assets, according to Aite Group LLC. These solutions charge fewer fees, are more open to smaller investors, and are more convenient, offering mobile access and sleek, easy to use apps and websites.
Although the figure remains relatively small compared to the US$ 130 trillion in assets currently under management globally, robo-advisors &8220;have a long runway for growth,&8221; Cyprys said.
Addressing the emerging trend, many firms and #banks have created hybrid models such as Charles Schwab and Vanguard, both of which have developed services that allow their advisors to make significant use of algorithms and robo-advisors.
RBC has teamed up with BlackRock&8217;s FutureAdvisor, Wells Fargo is planning to launch its own robo-advisor in 2017, and UBS&8217;s American wealth management division has invested in robo-advisor SigFig earlier this year.
Going further, Royal Bank of Scotland announced in March that it would replace 220 investment staff with robo-advisors. The bank said that in the future, only clients with £250,000 or more to invest will get face-to-face advice.
Despite the growing appetence for robo-advisors, industry observers and experts believe that these solutions will not necessarily displace traditional wealth managers.
&8220;This is not a human vs. robot competition where one will win,&8221; Jon Stein, CEO of Betterment, an American automated investing service, told Bloomberg.
&8220;There will be customers who want an online driven solution and there will be customers who want the in person relationship, but even those people will expect better #technology as part of the relationship.&8221;
Echoing Stein&8217;s statements, Citi analysts wrote in a report released earlier this year:
&8220;We see the advent of robo-advice as an example of automation improving the productivity of traditional investment advisers, and not a situation where there is significant risk of job substitution. Higher net worth or more sophisticated investors will, in our view, always demand face-to-face advice.&8221;
Holger Spielberg, head of digital innovation at Credit Suisse, shares this sentiment. In an interview earlier this year, Spielberg argued that automated investment services bring many benefits and opportunities to both customers and the banking sector.
&8220;At the end of the day, we #need to look not at what it means for banking, but for the user – the recipient of financial services,&8221; he said. &8220;We need to put them at the forefront.&8221;
Technological disruption is inevitable, Spielberg said. However, he also believes that some aspects of the traditional wealth management services will remain relevant, notably human engagement.
&8220;The human element is a crucial aspect of our strategy,&8221; he said. &8220;What isn&8217;t changing, even with all the changes, is the intent in receiving value.&8221;
Rather than creating a faceless and unresponsive automation, robo-advisors may very well add value and efficiency to private wealth management.
In July, former Credit Suisse bankers Bastian Lossen, Giles Keating and Felix Roescheisen announced plans to launch a new robo-advisor service called Werthstein, according to Finews.
Werthstein has created a new approach in digital wealth management. The solution combines a multimedia platform with portfolio management. The platform will provide wealth management services for free. Customers will only pay a subscription fee for video and multimedia content provided through the platform. These will mainly consist of video clips of bankers and experts sharing investment ideas.
Other robo-advisor services in Switzerland include True Wealth, Glarner KB, Swissquote, and InvestGlass.
Featured image: Robot hand by Ociacia via Shutterstock.com.
The post Robo-Advisory: Wealth Managers Need to Adapt to New Environment appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
The #robo-advisory #model is at a #tipping #point with all current players needing further development if the robo concept is to prove long-lasting.
Without further refinement on the part of the individual robo-advisors themselves, a substantial portion of current providers will have difficulties succeeding in the long-term. This is one of the main findings of the #report “Leading Robo-Advisors 2016 &8211; Benchmarking the current automated investment landscape and mapping the road ahead” for which the Swiss research company MyPrivateBanking Research analyzed and ranked 30 leading robo-advisors worldwide.
In their global benchmarking of robo-advisor platforms, the MyPrivateBanking report identifies plenty of examples of good practice at the level of individual functions. However, in the researchers’ view, no providers are yet coming close to offering an end-to-end consistent level of excellence. “We see that most robo-advisors are good at some features, but at the same time missing out completely on other important ones”, say Francis Groves, senior analyst of MyPrivateBanking Research.
“While this was tolerated by clients at the start of the robo-advisor breakthrough, they now demand a top-performance throughout the full process, from comprehensively explaining the services to superior portfolio reporting.”
MyPrivateBanking’s ranking of 30 robo-advisors from 15 countries awarded the highest scores to the these three platforms:
– Schwab Intelligent Portfolios (USA) – exhibiting great strengths in the key areas of product and process information and client assessment plus user experience (43 points out of 60).
&8211; Indexa Capital (Spain) – a good ‘all-rounder’ with a solid performance in all areas (42 points).
&8211; Nutmeg (UK) – Another example of excellent product and process information coupled with being one of the top three providers of investment knowledge and education (42 points).
However, with more than a third of the evaluated firms achieving less than half of the possible points, and the highest scoring robo-advisor scoring slightly less than 75% of the maximum available points, MyPrivateBanking sees considerable room for improvement. In particular the survey identified that there are too many gaps in most robo-advisors’ onboarding processes to guarantee a steady stream of new clients.
MyPrivateBanking’s evaluation covered 43 different criteria and assessed the performance overall including for the robo-advisors’ websites, mobile apps and social media channels. Some of the more troubling key research findings are:
(1) None of the platforms evaluated have yet developed the robo-advisory model of client recruitment to its full potential, with even the best current players leaving out at least one essential component. For example, analysts found that advisors provided either good information about the product and process OR good knowledge content but rarely both.
(2) Client assessment, the highest profile component of robo-advisor onboarding, is generally falling well below a sufficiently rigorous standard. Less than 50% of the evaluated advisors failed to explain the purpose of their questions and only 53% included a comprehensive check on a prospective investor’s attitude toward risk.
(3) A high proportion of the robo-advisors, 23%, are abdicating from the any responsibility for sustaining their own clients’ ongoing investing ‘career’ by the provision of relevant, easily digestible education and knowledge or even, in some cases, providing dedicated social media.
In respect to robo-advisors offered by well-established institutions the MyPrivateBanking analysts identified a tendency of such actors to enter the robo-advisor space for the first time by creating robo mini-sites. These are characterized as one or two page websites, which may or may not be embedded in the institution’s overall web presence, that are clearly not designed to be revisited by signed-up clients.
In MyPrivateBanking ‘s view this is a kind of robo-advisory sub-species that may assist with rapid client onboarding but which does not, on its own, do a lot to foster enduring client-advisor relationships. “We foresee the need for leading institutions to be more radical and wholehearted in their automated investment initiatives in the next few years, even if this means starting over again with a second robo-advisor to replace their first.”
“The pioneer years of robo-advisors have come to the end and the market will separate the wheat from the chaff“, stresses Francis Groves. „Too many automated investment services target the same, growing &8211; but still not sufficient &8211; client segment to nurture all or most of them. Too few of the automated investment services see their platform through the eyes of a first time user, while many are losing sight of the need for sustaining a customer experience that will – ideally – last for years.”
In this report, MyPrivateBanking makes a series of recommendations on the basis of our benchmarking evaluation, among them:
(1) Aiming for transparency is the best policy, especially when presenting the robo-advisor’s pricing and product and process information.
(2) Automated investment platforms need to be subjected to rigorous user experience testing. Looking good is not enough – equally, content must be in-depth.
(3) Robo-advisors risk side-lining themselves if they don’t recognize that clients need financial plans as well as investment portfolios. At least a basic financial planning offer should be considered for inclusion as part of the robo value proposition.
The post New Report: Robo-Advisory Model At a Tipping Point appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
U.S. #Bank has partnered with investment advisory firm #FutureAdvisor to provide automated, or #robo-advisory services to its clients at U.S. Bancorp Investments, an affiliate of the bank. FutureAdvisor was bought by the world’s largest investment manager, BlackRock, about a year ago. While roboadvisors have their advantages in terms of cost,Read More
Bank Innovation
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