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The rise of robo-advisors

By NexChange

The increasing presence of robo-advisors in the financial industry worries some investment professionals. If artificial intelligence can meet the needs of clients who want low-cost, tailored, active management of their savings, then the role of human intermediaries will soon become obsolete.

Kurt Schacht, managing director of Standards and Financial Market Integrity at the CFA Institute, took a deep breath and checked out a robo-adviser.

He found that it was “highly effective and efficient—probably a much better service and product than the traditional retail brokerage account with a salesperson on the other end”.

The robot welcomed him to the platform, asked a dozen questions about his financial history, objectives and risk tolerance and quickly created an optimal portfolio of low-cost, no-transaction-fee funds.

“It was slick and much more tailored and calculated than working with a typical broker salesperson”, writes Schacht.

But there was a flipside. The experience was cold and impersonal.

“It was as if investment management had been reduced to the equivalent of a drive-through fast food restaurant”.

But, quant providers feel that their time has come. At a recent event in New York where he participated as a panellist, Schacht found that they are convinced that few aspects of financial analysis, security selection and asset allocation can be delivered better by humans.

Eventually, they argue, soft skills for client relationships and communications will be unnecessary.

After all, who needs to talk with a real person who understands your financial challenges and appreciates your desired outcomes if a computer can get you to the same place in seconds?

“For traditionalist CFA charterholders who bleed the virtues of client loyalty, service, and professional judgment, the robo-adviser trend is disturbing,” writes Schacht.


Cyberport and NexChange are hosting an O-2-O meetup that will discuss this issue as well as examine many other opportunities and challenges that new financial technologies are creating in the wealth management industry.

The event will feature five speakers closely involved in the latest developments and it should attract a wide cross-section of more than 200 delegates:

Date: October 27, 2015

Time: 16:00-19:00

Venue: Cyberport 3, Hong Kong

Please register here

Photo: Andrej Blagojević

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