HYBRID ROBOS- HOW COMBINING HUMAN AND AUTOMATED WEALTH ADVICE DELIVERS SUPERIOR RESULTS AND GAINS MARKET SHARE
Case studies - Recommendations – Strategies
www.MyPrivateBanking.com
February 2016
Francis Groves
Senior Analyst
Report Extract
Original Report with 66 pages
HYBRID ROBOS │ 2
CONTENT TABLE
1.0 EXECUTIVE SUMMARY 4
2.0 METHODOLOGY 8
3.0 THE APPLICATION OF AUTOMATED MODELS TO
EXISTING PATTERNS OF WEALTH MANAGEMENT 10
4.0 ADVISORY MARKET SIZE AND GLOBAL GROWTH 31
5.0 RECOMMENDATIONS AND STRATEGY FOR
HARNESSING HYBRID ROBO TRENDS 38
6.0 CASE STUDIES 43
CAPITAL ONE INVESTING 43
HEDGEABLE 46
INVESCO/JEMSTEP 50
LIVERPOOL VICTORIA RETIREMENT/WEALTH WIZARDS ONLINE PENSION ADVICE 54
CHARLES SCHWAB, SCHWAB INSTITUTIONAL INTELLIGENT PORTFOLIOS 59
AUTHORS 65
DISCLAIMER 66
IMPORTANT NOTICE AND DISCLAIMERS 66
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TABLE OF CHARTS
Hybrid Robo U.S. Timeline 11
Advisor Now, formerly Upside; the (hybrid) pitch to financial advisors 15
Betterment: going for the retirement savings market 19
Charles Schwab: not worried about cannibalization 20
North America: Market Prognosis for Hybrid and Pure Robos 35
Rest of the World: Market Prognosis for Hybrid and Pure Robos 35
North America: Market Share of Different Robo Solutions 36
Rest of the World: Market Share of Different Robo Solutions 36
The Hedgeable platform offered as an integration on the Hedgeable Institutional website 41
From Hedgeable’s Instagram page 46
From the Hedgeable blog: an investment methodology sword fight with Wealthfront 47
Advisor firm branding of Schwab Institutional Intelligent Portfolios 59
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EXTRACT OF THE EXECUTIVE SUMMARY
EXTRACT OF THE EXECUTIVE
SUMMARY
(Executive summary in full report pages 4 to 7)
After the strong growth of the robo-advisory
approach in recent years, promoted by numerous
start-ups worldwide as well as a sizeable number of
early adopting wealth managers, a new ‘sub-
species’ has emerged: the hybrid robo/personal
contact service, which adds a substantial
component of human interaction to the use of
software for the client advisory process.
In our view, hybrid robo-advisory strategies
represent a paradigm shift in the pace and path of
change in the wealth management industry.
MyPrivateBanking estimates that hybrid robo
services will by 2020 grow to a size of USD 3,700
billion assets worldwide; by 2025 the total market
size will further increase to USD 16,300 billion. This
number constitutes just over 10% of the total
investable wealth in 2025. By comparison, “pure”
robo-advisors (completely automated without
personal service added on) will have a market share
of 1.6% of the total global wealth at that stage. The
report includes a projection for the market size and
global growth of Hybrid Robo-Advisors and pure
play robo-advisors, including a breakdown between
North America and the rest of the world, and a split
by the retail and affluent wealth and the
HNWI/UHNWI segments.
Hybrid robo solutions are a dynamic and also
unstable new phase in the wealth management
industry’s transformation. We expect 2016 to be a
year of significant developments – several major
players have announced that they will reveal their
hybrid offerings in the course of the year and many
more wealth managers are currently working
through the issues of hybrid robo adoption.
Institutional players entering the robo-advisor
markets and their offerings are analyszed in detail
in the report.
HYBRID SOLUTIONS WILL IMPACT MANY
FINANCIAL SERVICES SECTORS
The drivers for hybrid robo innovation will come
from several different sources within the global
financial industry. For a start there is the inspiration
derived from the original robo-advisor services. To
this must be added the new opportunities that have
arisen following the launch of a substantial range of
new B2B technology providers, some focused only
on the banking and wealth management industries
and others with a broader scope.
The next 12 to 18 months will provide numerous
demonstrations of the impact of the new (white
label) technology providers and robo/conventional
partnering on wealth management. In particular, as
this report’s case studies show, the resulting hybrid
wealth management solutions will spring up in a
number of different parts of the global finance
industry. Furthermore, with the help of robo
technology, MyPrivateBanking expects to see a
significant increase in quasi-wealth management
services from sections of the industry that have
been considered as distinct from wealth
management, such as pension providers, fund
managers and retail banks.
The robo model of investment portfolio
management will be good enough in the eyes of a
larger proportion of investors than the wealth
management industry itself yet seems ready to
recognize. Moreover, hybrid robo-advisory services
will increase the efficiency of advisors, in terms of
numbers of clients served per professional, and the
increasing numbers of hybrid solutions will also
have a significant downwards effect on the client
charges the market will bear.
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EXTRACT OF THE EXECUTIVE SUMMARY
WEALTH MANAGERS SHOULD IMPLEMENT
ROBO ADVISORS SOLUTION FAST, BUT
THOUGHTFUL
The report highlights 20 different
recommendations for consideration by wealth
managers in weighing up hybrid robo opportunities,
among them:
Wealth Managers should be wary of assuming that one or more robo-advisory elements can be just ‘added on’ to an existing service.
Especially in the retail and affluent segments, tie-ups with non-financial retail services of various kinds will be of increasing importance for the success of robo-advisory client recruitment.
For most wealth managers the path to a hybrid solution will have several stages; this is fine but clients’ awareness of the capabilities of automation will be increasing rapidly in the next few years.
In the higher wealth segments, wealth managers who automate ‘behind the scenes’ processes will be best placed to introduce client facing robo elements when they’ve established their client-base is ready.
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METHODOLOGY
2.0 METHODOLOGY
To provide an outline of MyPrivateBanking’s
approach in this report on hybrid robo-advisory
services, this chapter gives a brief description of our
overall methodology together with the thinking
behind our selection of case studies. We also
include here our working definition of hybrid
robo/personal contact and information about the
approach to wealth segmentation that we have
used.
(… more in full report pages 8 to 9)
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THE APPLICATION OF AUTOMATED MODELS TO
EXISTING PATTERNS OF WEALTH MANAGEMENT
3.0 THE APPLICATION OF
AUTOMATED MODELS TO
EXISTING PATTERNS OF
WEALTH MANAGEMENT
(… more in full report pages 10 to 30)
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THE ADVISORY MARKET SIZE AND GLOBAL
GROWTH
4.0 THE ADVISORY MARKET
SIZE AND GLOBAL GROWTH
(… more in full report pages 31 to 37)
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RECOMMENDATIONS AND STRATEGY FOR
HARNESSING HYBRID ROBO TRENDS
5.0 RECOMMENDATIONS AND
STRATEGY FOR HARNESSING
HYBRID ROBO TRENDS
(… more in full report pages 38 to 42)
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CASE STUDIES
6.0 CASE STUDIES
(… more in full report pages 43 to 64)
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AUTHORS
AUTHORS
Francis Groves, Senior Analyst, is a senior analyst for the research on vendors, mobile
apps and online services. His specific research interest is communication and
understanding in relation to finance topics and investor motivation. He has over 30
years of experience in the field of online business information, having worked for
Reuters, the Financial Times and LexisNexis. Francis speaks at conferences and events
and has published several books and articles. Among them 'Corporate Actions, A
Concise Guide' and 'Exchange Traded Funds, A Concise Guide to ETFs'. Francis has a
degree in History, which he studied at the London School of Economics.
Steffen Binder, Managing Director and co-founder of MyPrivateBanking Research.
Steffen is Head of Research and oversees the research agenda and analyst teams. He
is responsible for creating and developing powerful concepts and relevant content to
help our clients navigate a rapidly changing digital environment. As a regular speaker
at finance and technology industry events around the globe, Steffen is frequently
quoted by leading business media such as the Wall Street Journal, Handelsblatt and
the Financial Times. Prior to this, Steffen was Managing Director of Forrester Germany,
Switzerland and Austria. He came to Forrester through its acquisition of Forit GmbH,
a leading European technology research company, of which he was also a co-founder.
Prior to that, Steffen was a partner at Monitor Company (Strategy Consulting). He holds Master’s Degrees in
Organizational Behavior from Rutgers University (USA) and in Public Administration from the University of
Konstanz (Germany).
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DISCLAIMER
DISCLAIMER
IMPORTANT NOTICE AND DISCLAIMERS:
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