Robo-Advisors: Early Disruptors in Private Wealth Management

12/05/2017
AI

Summary

Although some view robo-advice as a passing trend, it has the potential to help investors and advisors alike, according to two new Grassroots Research surveys. Some advisors are even using the technology to manage smaller accounts more efficiently, which could bring more investors into the advice realm.


Key takeaways


  • Only 36% of investors in 2017 were willing to try a robo-advisor, down from 44% in 2016
  • Robo-advisors are helping advisors manage smaller accounts more efficiently, which could prompt more investors to seek advice

Is the future of wealth management digital, or is this trend overplayed? While it may be too soon to tell, it’s clear that “robo-advisors” – automated, online wealth-management services that provide algorithm-based portfolio-management advice – are continuing to attract attention from investors. Moreover, increasing numbers of financial advisors are beginning to use “systematic” or “robotic” investment strategies in their own practices.

To learn more about this trend in the private wealth-management industry, GrassrootsSM Research conducted two surveys in February 2017. The first targeted individual investors, while the second focused on independent and corporate financial advisors.

Investors like low fees but appreciate personal advice

The findings from our first survey indicated that, as expected, the lower costs associated with robo-advice are a key factor in the growth of these services. Slightly more than half of the individual investors we surveyed cited the lack of fees, or low annual fees, as the biggest appeal of robo-advisors. However, this didn’t prevent investors who use financial advisors for private wealth management from also appreciating the tailored services their advisors offer.

Only 36 per cent of respondents said they were somewhat to highly willing to try a robo-advisor in 2017 – a decrease when compared with our February 2016 survey results (44 per cent). Among those investors who use a financial advisor, slightly more than half said they are highly unlikely to switch their investments either fully or partially to a robo-advisor.

Advisors see selective value in robo-advice

Financial advisors also told us that robo-advisors are not very disruptive to their businesses: Only 10 per cent saw any client interest vs. 24 per cent last year. Some of this may be due to a slightly older demographic in our newer study, and advisors did say they expect to see a higher impact from robo-advisors as millennials earn more money to invest.

Investor net worth is another important factor: Advisors say that sophisticated investors with large portfolios expect a personalized approach that robo-advisors do not offer. This reinforces the finding that robo-advisors are more relevant to investors with smaller portfolios who are more sensitive to costs. We also found that advisors themselves are beginning to use robo-advisors as part of the services they provide – primarily to manage smaller accounts more efficiently. This again shows the cost-management value of robo-advice, which may end up bringing more lower-value investors into the advice realm.

The future is digital

Looking ahead, robo-advisors could become a greater competitive challenge to financial intermediaries – particularly given that younger investors expect to have more digital engagement with their finances. In the face of this challenge, advisors we surveyed said they will continue to emphasize and reinforce their value propositions, specifically the value of their broad financial-planning expertise and the personal relationship they can form with their clients.

At the same time, we also found that advisors are committed to incorporating the latest technologies into their practices to help them work more efficiently with their clients:

  • Several advisors use improved planning and analytics software, including risk tools that help them have more informed conversations with their clients.
  • Others are also investing in improved customer relationship management tools.
  • Some advisors point to the future ability of artificial intelligence and virtual reality to help them customize services for clients and respond more dynamically to their needs.

While robo-advisors may be struggling to gain ground in some areas of the market, there is no doubt that digital technology could play a bigger role in private wealth management in the future.

A Majority of Investors Aren’t Attracted to Robo-Advice

Our 2017 investor survey showed that 55 per cent are somewhat or highly unwilling to try robo-advisors.

Source: Grassroots Research as at February 2017.

This material is for reference only. Information herein is based on sources we believe to be accurate and reliable as at the date it was made. We reserve the right to revise any information herein at any time without notice. No offer or solicitation to buy or sell securities and no investment advice or recommendation is made herein. In making investment decisions, investors should not rely solely on this material but should seek independent professional advice.

This material is published for information only, and where used in mainland China, only as supporting materials to the offshore investment products offered by commercial banks under the Qualified Domestic Institutional Investors scheme pursuant to applicable rules and regulations. The fund, if any, referred to herein has not been approved by relevant regulatory authorities in mainland China.

Issued by Allianz Global Investors Asia Pacific Limited on 12 May 2017.

Allianz Global Investors Asia Pacific Limited (27/F, ICBC Tower, 3 Garden Road, Central, Hong Kong) is the Hong Kong Representative and is regulated by the HK SFC (35/F, Cheung Kong Center, 2 Queen's Road Central, Hong Kong).

New Opportunities for Investors

24/05/2017

Summary

As a high-tech force with the potential to disrupt entire industries, artificial intelligence could transform today’s world even more than the internet once did. And with AI at an inflection point, investors have an exciting opportunity to tap future sources of growth potential across the market.


Key takeaways


  • AI is a truly disruptive force that can create and destroy entire industries, which makes understanding AI critical to active investing
  • For example, AI-guided cars will not only move differently, but they may be owned, repaired and insured differently too
  • This AI inflection point gives investors an exciting opportunity to access future sources of innovation and growth potential

Allianz Global Investors

You are leaving this website and being re-directed to the below website. This does not imply any approval or endorsement of the information by Allianz Global Investors Asia Pacific Limited contained in the redirected website nor does Allianz Global Investors Asia Pacific Limited accept any responsibility or liability in connection with this hyperlink and the information contained herein. Please keep in mind that the redirected website may contain funds and strategies not authorized for offering to the public in your jurisdiction. Besides, please also take note on the redirected website’s terms and conditions, privacy and security policies, or other legal information. By clicking “Continue”, you confirm you acknowledge the details mentioned above and would like to continue accessing the redirected website. Please click “Stay here” if you have any concerns.

Welcome to Allianz Global Investors

Select your language
  • 中文(繁體)
  • English
Select your role
  • Individual Investor
  • Intermediaries
  • Other Investors
  • Pension Investors
  • Allianz Global Investors Fund (“AGIF”)

    • Allianz Global Investors Fund (“AGIF”) as an umbrella fund under the UCITS regulations has within it different sub-funds investing in fixed income securities, equities, and derivative instruments, each with a different investment objective and/or risk profile.

    • All sub-funds (“Sub-Funds”) may invest in financial derivative instruments (“FDI”) which may expose to higher leverage, counterparty, liquidity, valuation, volatility, market and over the counter transaction risks. A Sub-Fund’s net derivative exposure may be up to 50% of its NAV. 

    • Some Sub-Funds as part of their investments may invest in any one or a combination of the instruments such as fixed income securities, emerging market securities, and/or mortgage-backed securities, asset-backed securities, property-backed securities (especially REITs) and/or structured products and/or FDI, exposing to various potential risks (including leverage, counterparty, liquidity, valuation, volatility, market, fluctuations in the value of and the rental income received in respect of the underlying property, and over the counter transaction risks). 

    • Some Sub-Funds may invest in single countries or industry sectors (in particular small/mid cap companies) which may reduce risk diversification. Some Sub-Funds are exposed to significant risks which include investment/general market, country and region, emerging market (such as Mainland China), creditworthiness/credit rating/downgrading, default, asset allocation, interest rate, volatility and liquidity, counterparty, sovereign debt, valuation, credit rating agency, company-specific, currency  (in particular RMB), RMB debt securities and Mainland China tax risks. 

    • Some Sub-Funds may invest in convertible bonds, high-yield, non-investment grade investments and unrated securities that may subject to higher risks (include volatility, loss of principal and interest, creditworthiness and downgrading, default, interest rate, general market and liquidity risks) and therefore may adversely impact the net asset value of the Sub-Funds. Convertibles will be exposed prepayment risk, equity movement and greater volatility than straight bond investments.

    • Some Sub-Funds may invest a significant portion of the assets in interest-bearing securities issued or guaranteed by a non-investment grade sovereign issuer (e.g. Philippines) and is subject to higher risks of liquidity, credit, concentration and default of the sovereign issuer as well as greater volatility and higher risk profile that may result in significant losses to the investors. 

    • Some Sub-Funds may invest in European countries. The economic and financial difficulties in Europe may get worse and adversely affect the Sub-Funds (such as increased volatility, liquidity and currency risks associated with investments in Europe).

    • Some Sub-Funds may invest in the China A-Shares market, China B-Shares market and/or debt securities directly  via the Stock Connect or the China Interbank Bond Market or Bond Connect and or other foreign access regimes and/or other permitted means and/or indirectly through all eligible instruments the qualified foreign institutional investor program regime and thus is subject to the associated risks (including quota limitations, change in rule and regulations, repatriation of the Fund’s monies, trade restrictions, clearing and settlement, China market volatility and uncertainty, China market volatility and uncertainty, potential clearing and/or settlement difficulties and, change in economic, social and political policy in the PRC and taxation Mainland China tax risks).  Investing in RMB share classes is also exposed to RMB currency risks and adverse impact on the share classes due to currency depreciation.

    • Some Sub-Funds may adopt the following strategies, Sustainable and Responsible Investment Strategy, SDG-Aligned Strategy, Sustainability Key Performance Indicator Strategy (Relative), Green Bond Strategy, Multi Asset Sustainable Strategy, Sustainability Key Performance Indicator Strategy (Absolute Threshold), Environment, Social and Governance (“ESG”) Score Strategy, and Sustainability Key Performance Indicator Strategy (Absolute). The Sub-Funds may be exposed to sustainable investment risks relating to the strategies (such as foregoing opportunities to buy certain securities when it might otherwise be advantageous to do so, selling securities when it might be disadvantageous to do so, and/or relying on information and data from third party ESG research data providers and internal analyses which may be subjective, incomplete, inaccurate or unavailable and/or reducing risk diversifications compared to broadly based funds) which may result in the Sub-Fund being more volatile and have adverse impact on the performance of the Sub-Fund and consequently adversely affect an investor’s investment in the Sub-Fund. Also, some Sub-Funds may be particularly focusing on the GHG efficiency of the investee companies rather than their financial performance which may have an adverse impact on the Fund’s performance.

    • Some Sub-Funds may invest in share class with fixed distribution percentage (Class AMf). Investors should note that fixed distribution percentage is not guaranteed. The share class is not an alternative to fixed interest paying investment. The percentage of distributions paid by these share classes is unrelated to expected or past income or returns of these share classes or the Sub-Funds. Distribution will continue even the Sub-Fund has negative returns and may adversely impact the net asset value of the Sub-Fund.  Positive distribution yield does not imply positive return.

    • Investment involves risks that could result in loss of part or entire amount of investors’ investment.

    • In making investment decisions, investors should not rely solely on this [website/material].

    Note: Dividend payments may, at the sole discretion of the Investment Manager, be made out of the Sub-Fund’s capital or effectively out of the Sub-Fund’s capital which represents a return or withdrawal of part of the amount investors originally invested and/or capital gains attributable to the original investment. This may result in an immediate decrease in the NAV per share and the capital of the Sub-Fund available for investment in the future and capital growth may be reduced, in particular for hedged share classes for which the distribution amount and NAV of any hedged share classes (HSC) may be adversely affected by differences in the interests rates of the reference currency of the HSC and the base currency of the respective Sub-Fund. Dividend payments are applicable for Class A/AM/AMg/AMi/AMgi/AQ Dis (Annually/Monthly/Quarterly distribution) and for reference only but not guaranteed.  Positive distribution yield does not imply positive return. For details, please refer to the Sub-Fund’s distribution policy disclosed in the offering documents.


    Allianz Global Investors Asia Fund

    • Allianz Global Investors Asia Fund (the “Trust”) is an umbrella unit trust constituted under the laws of Hong Kong pursuant to the Trust Deed. Allianz Thematic Income and Allianz Selection Income and Growth and Allianz Yield Plus Fund are the sub-funds of the Trust (each a “Sub-Fund”) investing in fixed income securities, equities and derivative instrument, each with a different investment objective and/or risk profile.

    • Some Sub-Funds are exposed to significant risks which include investment/general market, company-specific, emerging market, creditworthiness/credit rating/downgrading, default, volatility and liquidity, valuation, sovereign debt, thematic concentration, thematic-based investment strategy, counterparty, interest rate changes, country and region, asset allocation risks and currency (such as exchange controls, in particular RMB), and the adverse impact on RMB share classes due to currency depreciation.  

    • Some Sub-Funds may invest in other underlying collective schemes and exchange traded funds. Investing in exchange traded funds may expose to additional risks such as passive investment, tracking error, underlying index, trading and termination. While investing in other underlying collective schemes (“CIS”) may subject to the risks associated to such CIS. 

    • Some Sub-Funds may invest in high-yield (non-investment grade and unrated) investments and/or convertible bonds which may subject to higher risks, such as volatility, creditworthiness, default, interest rate changes, general market and liquidity risks and therefore may  adversely impact the net asset value of the Fund. Convertibles may also expose to risks such as prepayment, equity movement, and greater volatility than straight bond investments.

    • All Sub-Funds may invest in financial derivative instruments (“FDI”) which may expose to higher leverage, counterparty, liquidity, valuation, volatility, market and over the counter transaction risks.  The use of derivatives may result in losses to the Sub-Funds which are greater than the amount originally invested. A Sub-Fund’s net derivative exposure may be up to 50% of its NAV.

    • These investments may involve risks that could result in loss of part or entire amount of investors’ investment.

    • In making investment decisions, investors should not rely solely on this website.

    Note: Dividend payments may, at the sole discretion of the Investment Manager, be made out of the Sub-Fund’s income and/or capital which in the latter case represents a return or withdrawal of part of the amount investors originally invested and/or capital gains attributable to the original investment. This may result in an immediate decrease in the NAV per distribution unit and the capital of the Sub-Fund available for investment in the future and capital growth may be reduced, in particular for hedged share classes for which the distribution amount and NAV of any hedged share classes (HSC) may be adversely affected by differences in the interests rates of the reference currency of the HSC and the base currency of the Sub-Fund. Dividend payments are applicable for Class A/AM/AMg/AMi/AMgi Dis (Annually/Monthly distribution) and for reference only but not guaranteed.  Positive distribution yield does not imply positive return. For details, please refer to the Sub-Fund’s distribution policy disclosed in the offering documents.

     

Please indicate you have read and understood the Important Notice.