Automated financial advisory is disrupting the asset management landscape - especially the retail segment. For institutional investors and UHNW clients, investment managers expect only minor changes.
In the short and medium term, robo advisor have the potential to disrupt the financial service landscape, says a survey among members of the CFA Institute. 70 percent of participants expect that especially wealthy clients can profit from automated investment management. Low costs, a simple access to products and a huge scope of products make them move from traditional asset managers to the new players.
For institutional investors and ultra-high net worth clients, the participants expect only minor changes. Most state that they perceive it as “unrealistic” that automated advisory will replace personal advisors in those segments. The complex demands and the large portfolios of professional investors can hardly be standardised.
However, the opinion on automated advisory polarises: An equal share of participants (38 and 37 percent respectively) says that risk will be increased and decreased. The largest concerns of participants are errors in algorithms, wrong advisory and data privacy.
The survey was conducted in February with 3,803 volunteering participants of a panel on capital markets as part of the CFA Institute.