28nRo9J

Digital Wealth Management
Justin Balogh, Link Pacific Advisors (cont.)
Where do you see the biggest opportunity for robo advisor technology in Asia (i.e going direct, partnering with
large financial institutions, etc.)?
I think it is very likely that partnering with large financial institutions will dominate the way forward for robo advisor technology. It’s
true for financial services in almost any location that going direct, brand building and client acquisition from scratch can be difficult to
achieve in a short period of time. The combination of robo technology with established brands and more importantly, established
client bases, will define how widely these platforms are used. We are already seeing examples where early Robo advisors operating
in Asia are increasingly keen to explore collaborations with established financial institutions rather than focus rely solely on
independently growing a client base.
How do you expect the traditional financial institutions to respond as robo advisors gain market share? Have
any of the recent acquisitions (FutureAdvisor, Jemstep, etc.) surprised you?
There is a lot of precedent in financial services where product evolution that competes with the status quo has forced traditional
players to either participate in the process or risk being left out. As an example, a number of the early stakeholders of electronic
trading platforms were the same firms that had historically held higher spread, traditional business models. Very similar to
observations in the U.S, traditional financial institutions in Asia are paying close attention to the development of these platforms.
Some have been early round investors in robo advisor start-ups, others have launched their own offerings or are actively seeking to
catch up on the applicability to their own business models. Some level of participation will be important. Not every motivation is
defensive though. In the U.S., some leading firms are participating more because they see growth potential of complimentary
business expansion. In that context also, the recent acquisitions of FutureAdvisor and Jemstep by established brands is not
surprising at all.
Have any pure-play robo advisors gained significant traction in Asia?
It is still early but it would seem that client acquisition and as a result, return on investment for those that have funded independent
robo advisors, will be slower going in Asia unless they are willing to partner or are seeking to be acquired. There is considerable
potential for growth but general awareness amongst retail investors in Asia about robo advisors is still comparatively lower than the
U.S. Many early examples in Asia have pursued models that focus primarily on ETFs to underpin the investment portfolios. While
consistent with the low-cost philosophy tied to robo advisors, some Asian markets are still surprisingly under developed in the retail
adoption and understanding of ETF investing. The ability to include low-cost fund structures or wrap accounts for underlying
investment portfolios will also be important to ensure necessary flexibility.
41