How will robo advisory disrupt the ETF market?

Robo advisory has the potential to disrupt the ETF market and wealth management industry. However, its effects are likely limited, leading to cost reduction rather than displacing bankers, according to experts at The Asset 3rd ETF Asia Summit in Taipei.

“Robo is disrupting the industry,” says Steven Seow, head of wealth management for Asia at Mercer, at the ETF summit. “Critical [to the] success of robo is the underlying investment capability, not just technology.”

Panel: Digitalization, robo-advisory and its impact on ETFs, at The Asset 3rd ETF Asia Summit in Taipei, September 12.

ETF is considered a cheaper investment tool compared to other asset classes. Market experts expect that the wider use of robo advisory will further lower costs in the industry.

“The disruption is bringing down the cost, such as [how] ETFs have done with active funds,” says Pradeep Pant, head of retail and private banking for Taiwan at ANZ. “Robo advisory is about personalizing at lower cost,” adds Steve Yang, senior partner and head of Taiwan and Greater China at Prive Financial.

In the short term, while technology can replace some manual work, it is unlikely that bankers will be fully displaced by robo advisory technology. “Distribution is still largely from intermediaries – banks or asset managers,” says Yang. “I have seen a lot of B2C [robo advisors] pivot to working B2B with banks.”

“I have seen a change where clients use technology, but advice still comes from bankers,” adds Pant. “Bankers are unlikely to disappear in next five years, despite technology.”

This article features commentary from The Asset 3rd ETF Asia Summit in Taiwan. Click here to catch up on the event.

Date

12 Sep 2017

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