• Home
  • Contact
FICCI blog
  • Home
  • Contact
Home  /  Domestic Economy  /  Robo Advisory – Democratising Investment Advisory

Robo Advisory – Democratising Investment Advisory

Written by
Domestic Economy CAPAM2017, capital markets Comments are off
Share this..
Twitter0
Facebook0
LinkedIn0

AI and machine learning to augment robo advisory offerings

The future will increasingly involve automated services using artificial intelligence (AI) models such as machine learning where computers can make inferences about client behaviour and needs based on a large quantum of data.

Responsive AI is upping the ante when it comes to wealth management robotics. The next stage is financial planning driven by context and having goal based systems. Coupled with AI, machine learning is also gaining traction where the task involves making the computer learn the necessary relationships and actions involved in completing a task intelligently. This training involves using a large data set that the computer algorithm can repeatedly go through. Thus, it would learn, through trial and error, how to connect the input data (e.g. credit history, employment history, assets, purchasing history) with the desired output (e.g. the correct identification of a suitable risk portfolio). Once this is learned, the algorithm can be used on real world data offering largely positive results.

For example, global firms have started developing wealth management software, which will mine, manage and analyse all the data available about an investor – Facebook posts, spending habits, investment choices, tweets, etc, – using AI to find patterns to customise a financial plan and investment strategy. The benefits of developing enhanced software for the industry go beyond helping to understand clients better. Responsive AI, for example, currently provides software that handles the back-end office and compliance work for a wealth management operation. However, the future would involve creating AI that draws on a discipline of social psychology called psychometrics that uses statistics to build profiles of investors. This will help map personality traits etc., which can help prepare strategies that the advisor puts together for clients.

Global robo advisory adoption

The idea of a robo advisory business model surfaced a decade back when a start-up company Betterment ventured into the domain and attempted to alter the way the advisory business was done. Since then, its AUM has scaled to $7.4 billion and attracted cumulative funding of ~ $200 million (source: Bloomberg). The global robo advisory industry since 2012 has also attracted PE funding to the tune of $1.32 billion (source: Reuters), thereby highlighting the business model is gaining acceptance. Scalability benefits have also attracted mainstream players such as Charles Schawb, which has launched its offering Intelligent Portfolios in 2014. Within three years of its operation, the offering commanded an AUM of $10.2 billion serving over 75000 clients. In the process, it has also surpassed the AUM of its smaller counterparts like Betterment and Wealthfront. Other instances also include firms like Vanguard that have scaled up their robo advisory as they manage an AUM of ~$47 billion while firms like Black rock and Fidelity have taken up the M&A/partnership model to shore up their offerings.

Shilpa Kumar, Co-Chairperson, FICCI Capital Markets Committee and Managing Director & CEO, ICICI Securities Limited writes piece for us.

Pages:

1 2 3
 Previous Article Wholesale and Long-Term Finance Banks: Promoter Selection and Funding Sources hold the key
Next Article   SMART Digital Banking Platforms

Related Posts

  • Rebooting the Municipal Bond market

  • foreign exchange risk management in india

    Foreign Exchange Risk Management in India

  • Financial Services Sector in India - The Way Forward

    Indian Financial Sector – The way forward

  • Popular Posts
  • Recent Posts
  • Direct Selling – An Avant-garde Model
  • A Billion+ Customers need a Million Sales and Service Touch Points
  • Changing Times for Mining and Steel Sector in India Post COVID 19
  • Insurance Jobs of the Future
  • Massive potential for farmers, consumer by strengthening millet value chain; Let’s strive to put ‘Millets on every plate’
  • Energizing travel towards a sustainable future
  • Mining for a Green Future- What Lies Ahead
  • Technology transfer and collaboration – an important tool in enhancing the healthcare ecosystem

Drop us a line..

March 2023
M T W T F S S
« Jan    
 12345
6789101112
13141516171819
20212223242526
2728293031  

FICCI Tag Cloud

banking budget business business confidence CAPAM 2017 Knowledge Paper capital markets Changing Face of Insurance crime direct selling economic relations economy economy insights Economy of Jobs economy watch education environment FDI ficci finance financial foresights fintech growth GST healthcare homeland security india industry innovation insurance MSME oil opec policy policy reforms RBI reforms retail skills Skills for All SME survey technology UK universal basic income women
   Get Updates via RSS Feed

   FICCI website

Social Media

  • Connect on Facebook
  • Connect on Twitter
  • Connect on LinkedIn
  • Connect on Instagram
  • Connect on YouTube

Archives

Popular Posts

  • Energizing travel towards a sustainable future
  • Mining for a Green Future- What Lies Ahead
  • Massive potential for farmers, consumer by strengthening millet value chain; Let’s strive to put ‘Millets on every plate’
© Copyright 2018. FICCI.