With NZ on the cusp of introducing personalised ‘robo advice’ solutions, potential suppliers of the service must carefully evaluate their strategies, a new white paper says.
The Mosaic Financial Services Infrastructure ‘Bot or Not?’ report released last week, says prospective digital advice (DA) providers ranging from large institutions to boutique advisory firms should base their market entry around four key factors: target client base; operating model; technological capability; and, timing.
“Those strategies will in turn determine the most appropriate technological solution for each respective provider,” the paper says.
If properly implemented, DA could prove beneficial across the financial services value chain, the Mosaic report says, including investors, wealth managers, financial advisers, service providers and regulators.
“While DA is often cast as primarily a solution for the battlers and hipsters – neither traditional targets of wealth management firms – behavioural trends suggest we are all becoming ‘millennialised’ with the demand for instantaneous tech-driven solutions crossing all demographic barriers,” the white paper says.
The study, produced by Mosaic founding partner, Myles Allan, in association with Investment News NZ, cites offshore studies predicting a massive uptick in DA assets over the next couple of years with projections for the market to reach between US$2 trillion to US$8 trillion by 2020.
“According to a report published by Deloitte in October 2017, DA assets under management could hit $16 trillion by 2025, taking the industry above the world’s single-biggest fund manager, BlackRock,” the paper says.
The growth of DA in NZ has been stymied by the current legislation requiring ‘personalised’ financial advice be delivered by a ‘natural person’. However, the Financial Markets Authority (FMA) is in the final phases of producing an exemption allowing DA operators to go live in NZ early next year.
Submissions on the FMA draft robo-exemption must be in by this Friday.
For a free copy of the Mosaic white paper click here.