Asset Management and Robo Advisors

robo-advisorLately, we have been hearing a lot about robotics, Artificial Intelligence (AI), virtual reality and few other technologies soon taking over our lives in near future. Although few industries are way ahead in robotics, financial services is catching up.

Wealth and Asset management industry is experiencing “robotic revolution” — in the form of robo-advisors.

Asset Management is a team within a financial firm that is dedicated to managing the assets (cash, investments etc.) of clients. Wealth and Asset management is over $74 trillion dollar industry globally and is well guarded. Firm’s dedicated portfolio managers make fat checks for the well-researched, fact-based advise that they are providing for retail and institutional investors — all at steep cost!

Enter Robo-Advisors …

They are algorithm based financial advisors providing investment advise to investors. They are marketed as a less-expensive alternative to human financial advisors.

Here’s how it works: An investor fills out a questionnaire (risk profile, income, age, etc), and based off certain algorithms robo-advisor recommends certain products with right allocation of asset classes and funds. They are fast, cost-effective and efficient and more importantly puts customer in control.

Who are the key players?

Betterment, Wealthfront, FutureAdvisor, Wisebanyon, Bloom, Motif to name a few. Also, incumbents like BofA, Charles Schwab, Vanguard are also either building in-house capabilities or acquiring niche players to bolster their offerings.

Great Customer Experience is what attracts customers to robo-advisors

If you look at any of players listed above, there is one common trait – BEST IN CLASS USER EXPERIENCE!

# Underpinnings Guiding Principles
1 Great Customer Experience
  • “Minimalist Design”;
  • Intuitive, simple navigation
  • Simple, easy to understand, bold text (no legal jargons)
  • Guided navigation
  • Clear CTA
  • Easy signup
2 Engaging Technology
  • Engaging interactive Visualization tools (sometimes 3D)
  • Comparison tools
  • Real-time support i.e. Online chat and help center
  • Business tools like “retirement calc”, “what-if analysis”, etc
3 Great Content
  • Blogs
  • Transparency in pricing (TRUST factor)
  • Useful materials like whitepapers, POVs
4 Social Media Engagement
  • Good social presence in terms of engagement, applause, conversation, engagement,  across Twitter, Facebook notably, and other platforms
  • SEO friendly

I believe this is just a beginning of a major disruption. With tech advancements, not only would the investments space change dramatically, but we could potentially see robots managing entire financial aspects of life (how we spend, how we invest, etc) and make us all a bit more disciplined.

What do you think?


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