Mass affluent investors in Southeast Asia prioritize advisory services over traditional execution services and are more willing to trust investment advice provided by artificial intelligence (AI) than their older peers, according to a recent survey report.
The region, with a vast and growing mass affluent segment of youthful tech-savvy investors with unmet wealth management needs, presents, according to the report published by Allianz Global Investors, a huge opportunity for a digital advisory platform with the right mix of technologies and investment services.
With over half of Asia’s wealth now held by the broader base of emerging affluent and affluent Asians – those with assets between US$10,000 and US$1 million – this fast-growing, yet underserved, segment is driving the growth of wealth management in the region.
The report identified a marked shift by investors in Southeast Asia towards advisory services, with the biggest proportion (42% of respondents in the region) seeking expert advice compared with 32% who only want traditional execution services.
Advisers today often have between 300 and 400 clients, the report points out, making personal service extremely challenging. In terms of advisory, younger investors surveyed, aged 18 to 50, are nearly 60% more likely to trust advice generated by AI than those over 51.
With one-third of the population of countries in the Association of Southeast Asian Nations aged 19 or younger, and as the wealth is transferred to the younger generation, there could be a sharp increase in the share of it entrusted to digital advice. The only way to provide personalized advisory services cost-effectively at this scale is digitally.
As well, Southeast Asia’s mass affluent investors want a personalised 24/7 wealth management service with a strong advisory component, offering portfolio construction, financial education, new products, and investment insights and engagement. All four can be delivered more efficiently via digital means.
However, owing to a lack of platforms in the region offering the full suite of priority capabilities, digital wealth management propositions have only had a modest market penetration of less than 10%.
Building a digital wealth offering today does not need to be done alone, the report notes, as about 77% of industry executives believe that firms are best placed to develop the necessary capabilities via strategic collaboration, rather than by developing them in-house or through acquisition.
“This creates an immense opportunity for the right digital wealth management service” says Eddy Kwong, director of digital business and business management, AllianzGI. “API [application programming interface] connectivity is essential for fast development and rapid rollout, and backed by ample testing and detailed documentation, makes for a shorter time to market. Amid all the market uncertainty, investors’ trust is earned by offering experience-enhancing digital services that allow them to create personalised portfolios and receive AI-led advice to outperform the market.”