Human management

Robotic advisor reshapes the wealth management industry

A virtual financial advisor powered by artificial intelligence will make the Chinese wealth management market fairer and more accessible. The AI ​​assistant brings better-than-market returns on investment for clients, especially those with limited funds, Licaimofang (Money Cube) said.

The Chinese have a total of around 20 billion yuan ($ 3 billion) of financial assets available for investment (excluding real estate assets), 49% of which are owned by people with investment assets between 500 000 yuan and 6 million yuan, according to industry sources.

These citizens cannot use private banking services, the entry level of which is 6 million yuan, which is a very small percentage of the Chinese population.

“This is unreasonable. Wealth management should be an inclusive service like health care and education,” said Yuan Yulai, founder and general manager of Licaimofang.

The tech company offers virtual AI advisers to optimize investment decisions and avoid risk, which makes sense in China where stock prices often fluctuate sharply.

The company now has hundreds of thousands of customers, 98% of whom have positive feedback. The total return rate has reached 16% in 2019, 10% in 2020 and 10% so far this year, despite the pandemic affecting various industries and the economy as a whole.

The company can offer a return above the market average despite the risks inherent in investing in the financial markets.

In comparison, banks offer an annual return on investment of 4% or less. Private banking services, which require a high fund threshold, offer returns of 8-10%.

Supported by the virtual advisor, one staff member can serve more than 8,000 clients, which enables wealth management services to serve more people, Yuan said.

AI makes investing fairer because people have similar percentage returns whether they pay 5 million yuan or just 50,000 yuan, he added.

The AI ​​system, operational for more than five years, covers financial product analysis, customer mood management and risk control functionalities.

The AI ​​consultant is more responsive and makes fewer mistakes with minimal human intervention. It brings long-lasting returns on investment and avoids long-term risks.

Over the next five years, Chinese virtual advisers will overtake their US counterparts like Wealthfront and Betterment in terms of investment volume, thanks to booming economic development and investment demands, Tsinghua University said in a report. .

In the future, the company may add an “investment period” factor in the AI ​​system to provide more personalized and flexible services, Yuan added.