Robert Half in Singapore have noted the arrival of automation in the financial services sector. The company has even taken note of the emergence of robo advisors in the sector – financial planning software that helps investors manage their portfolios and process investment data.
There have been reports from news portal FinTecNews that Robo-advisory firms have sprung up in Hong Kong, Japan and Singapore to cater to different niches of investors that may have been previously under-served by banks.
However, robo advisors have the potential to displace the jobs of traditional wealth managers. Before robo advisors arrived in the investment scene, wealth planning was traditionally seen as something only high net worth (HNW) investors could afford. A private banker can provide such a service to someone with at least US$1 million in investible assets while those with smaller amounts are relegated to buying the fund-of-the-day at the local bank branch.
With its lower cost of operation, robo advisors have since opened up financial planning access to investors with lower net worth as the starting minimum balance is reduced and a larger range of investment structures are made available.
According to Ned Philips, CEO of Singaporean robo advisor Bambu, robo advisors expand the investment market by offering a larger range of financial products and markets access to investors, as well as allowing different amounts of investments to be made.
“These moves increase public exposure to financial products and portfolios, which then encourages people to invest digitally. I believe this democratises the investment industry,” says Philips.
Chandrima Das, CEO of bionic robo-advisory Bento says, “Most clients in Asia are sitting on cash and are not investing in capital markets. An advisor using robo technology will be able to engage client efficiently and gather more assets and therefore scale up their total asset base.” Artur Luhaäär, CFO and co-founder of robo advisor Smartly, says that this new platform solves a huge gap between what customers want and what institutions are offering.
On the industry front, Philips says that robo technology makes wealth managers’ lives easier: “Financial institutions can use robo advisory services to automate administrative investor data, which helps relationship managers focus on providing value-added services to their clients,” he said.
Das believes that robo advisors may even encourage more people to sign up as financial advisors as the focus goes “back to basics where the advisor in involved in engaging the clients.”
Although robo advisors have the potential to displace the jobs of traditional wealth managers, they can also create a new range of jobs. Das predicts finance jobs requiring new skill sets to pop up in the industry. “For instance, robo advisors need investment analytic tools to assist in their operations, and ETF providers would also find themselves busy to support the ecosystem,” she explained.
Luhaäär agrees with the sentiment as well: “To me, robo advisors represent the movement towards quantitative, technology-powered investment solutions and products. Besides jobs involved in developing robo-advisory technology, there will be a need for new jobs in quantitative finance.”
As the digitisation of asset management inevitably involves large amounts of data analysis, quantitative analysts will be in demand by robo-advisory companies to make sense of clients’ investment data.
While robo advisors have introduced much-needed innovation in the wealth planning process, there are some limitations given that it is still a developing technology. Robo advisors have helped expand the industry’s reach, simplify the investing process and create new jobs in digital banking and development. However, human insight is still necessary in financial planning, which makes a human-robo combination the more viable wealth planning strategy for the modern investor.
A Hong Kong-based investment banker that Robert Half spoke to supports the balanced viewpoint: “When wealth managers utilise robo capabilities, investors (ultimately) get better service. Robo advisors can help access databases and predict customised services for customers with artificial intelligence, while bankers get to handle more clients during busy periods. Those bankers with good problem solving skills will do well while those without should start developing these now.”