Wednesday 20 February 2019

George Triplow

GCC financial advisors positive about robo-advice

DUBAI, January 21, 2018

Forty-nine per cent of financial advisors in the GCC were upbeat about the prospects for robo-advice, even if only 35 per cent of them saw it as an opportunity for their businesses in 2017, said professional services firm EY in a new report.

Twenty-two per cent saw robo-advice as a threat to their business, as we see the significant development of auto mated advice in the region, according to the 3rd Annual EY GCC Wealth and Asset Management 2017 report.

George Triplow, EY Mena Wealth and Asset Management leader, said: “Technology has revolutionized industries all over the world, and the GCC wealth management industry is no exception. Strong client preference for digital channels and the pressure to grow revenue mean wealth and asset managers must rethink their strategies, operations and technologies.

“Adapting early to the new reality will open the door to profitable future growth opportunities. The leaders will be those who harness blockchain, automated-advice, artificial intelligence and robotic process automation. The recent focus on particularly for crypto in the region set the scene for a dynamic landscape for institutions moving forward.”

Established firms have launched competing automated advisory and digital offerings in competition to others. Some firms have launched their own robo-advisors, while others have partnered with external providers, or bought formerly independent players or have just provided small equity financing.

An analysis of 24 WAM firms revealed that around 60 per cent launched their offering via partnerships or built their own robo-advisory platforms.

“Going forward, we can expect to see a large number of asset managers and independent advisors partnering with skilled technology firms that are able to optimize robo-advisor technology much more efficiently than they could do in-house,” said Triplow.

Digital wealth managers to overtake traditional wealth managers

Digital wealth managers will dramatically increase their market share over the next few years and control roughly a third of the global wealth management industry in 2025.

Wealth managers with a new digitalized, holistic business model are expected to drive traditional wealth managers out of the market by 2025. Holistic wealth managers, who provide digitalized investment advice that is driven by life events and that generates true added value for clients, will see their share of the market jump from close to zero currently, to between 20 per cent and 30 per cent by 2025.

Software-based tools will enable these wealth managers to collect vast sums of data from different information sources and providers.

Global wealth management market for clients with more than $1 million (€850,000) to invest will grow by around a quarter from more than $55.4 trillion now to $69.6 trillion by 2021, representing an annual increase of around 4.7 per cent.

Social media strategies

Wealth managers have become more imaginative in the ways in which they maintain contact with their clients. More than two-thirds of the GCC region’s advisors now have a social media engagement strategy.

“Historically, there were two main groups of clients in the GCC who have investable assets: GCC nationals and high-income expatriates,” said Triplow.

“However, a third group is emerging that is attractive to wealth managers and private banks: the affluent segment of upwardly mobile millennials who want to transact business in a different way and communicate with advisors in a different way. The development of digital banks is testament to this. But it also means that assumptions that hold for private banks and wealth management businesses in developed markets do not necessarily apply in the GCC region,” he concluded. – TradeArabia News Service

Tags: EY |

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