Many traditional firms not embracing digital revolution

Dhaka,  Wed,  28 June 2017
Published : 17 Jun 2017, 13:39:08
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Many traditional firms not embracing digital revolution

A tiny minority of wealth managers surveyed by Wealth-X this year say they plan to offer robo-advice to their customers, despite an increasing number of nimble, digital upstarts entering the wider market, according to a global media report Saturday.

Expensive offices are replaced by digital platforms. Instead of a new client meeting followed by a decent lunch, most robo platforms have some form of online questionnaire to gather data about your finances and risk appetite. This will determine your suitability for a selection of different pro forma investment portfolios, often assembled by using cheap exchange traded funds (ETFs) and passive funds.

Many entry-level robo advisers are aimed at the “Henrys” of this world -- high earners who are “not rich yet”.

Nutmeg, Wealthify and MoneyFarm have all launched low-cost online wealth management platforms in recent years, designed to scoop up this growing mass affluent market.

Nutmeg, for example, keeps costs to a minimum -- charging 0.75 on the first £100,000 invested and 0.35 per cent thereafter -- by building risk-weighted portfolios with ETFs, which mimic the movements of various indices.

In the past year, many established wealth management brands have been developing their own version of these lower-cost services for those not yet in the super-rich league.

Last year, Brewin Dolphin, the FTSE 250 wealth manager, launched a robo-adviser aimed at investors with between £10,000 and £200,000 for a charge of 0.7 per cent of invested assets. And rival Killik & Co is set to bring out Silo, designed to attract customers who can afford to save as little as £25 per month.

This puts the wealth manager in competition with the high street banks who are also seeking clients at the lower end of the wealth bracket. HSBC, RBS, Barclays, Lloyds and Santander are all moving towards offering robo-advice.

They have a huge advantage in this market, as the rise of online banking means they have already invested heavily in tech platforms and apps.

- SZ
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