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Matthias Knab, Opalesque: Flynt, a Swiss FinTech focusing on proprietary technology platform for private and institutional clients, has published a brief paper on "Investing in the world
of robo-advice and
passive instruments".
As investors will become more reluctant
to pay for investment advice without alpha, and the demand for
passive investment solutions will therefore continue to exist and
potentially increase.
Today, about one third of the share of outstanding
equities is held by passive investors and they are projected
to control half of the U.S. stock market by 2021. However, today's
SAA methodologies applied by robo-advisors are quite simplistic.
In most cases, the number of risk profiles is not sufficient to
cover all client risk profiles and their investment goals in a systematic
way. Typically, their investment universe and focus are narrow
and geared towards a specific client segment, a regional focus, or
reference currency. The robo-advisor of the future will have to
offer more customized and broader investment strategies.
To obtain diversified market exposure, a passive implementation
of an investment strategy is generally cheaper, more efficient and
transparent, and thus a preferred way to invest for cost-sensitive
clients. Robo-advisors will not only become the preferred investment
solution for retail clients, but will also gain importance in
the affluent and high net worth individuals segments. Through
co-operations with fintech companies or acqu...................... To view our full article Click here
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