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China’s super rich are wary towards AI ‘robo advisers’, preferring humans instead

China’s super rich are less trustful towards robo advisers than their US counterparts, according to global consultancy McKinsey

PUBLISHED : Wednesday, 04 April, 2018, 7:03am
UPDATED : Wednesday, 04 April, 2018, 7:02am

Super rich investors in mainland China are skittish towards robo investment advisers taking control of their investments, reflecting a major shift from the US where the asset management tool has enjoyed growing popularity, according to global consultancy McKinsey.

Only about 11 per cent of mainland securities investors with investible asset of more than 3 million yuan (US$477,000) endorse the technology to make investments, according the survey released on Tuesday.

About 32 per cent of all respondents said they would endorse robo-advisers for full investment dealings.

The findings show that the majority of mainland securities investors look to robo advisers as an additional source of investment information and financial product recommendations.

However, few are ready to trust artificial intelligence for making calls on investments, in contrast to the faith investors place in robo-advisers in the US and other developed markets, McKinsey said.

“Mainland securities investors are little interested in how robo-advisers work in matured markets,” said McKinsey in the report.

The consultancy polled more than 2,000 investors with investible assets ranging from 10,000 yuan to 6 million yuan from across 44 mainland cities in the July to September quarter.

“Mainland securities investors take a more proactive approach in securities investments and change hands more frequently,” McKinsey said.

Chinese brokers face rising regulatory risks in 2017 as Beijing clamps down on leverage

About 33 per cent of respondents with more than 3 million yuan in investible assets, the most affluent segment, showed a preference for personal meetings with human advisers. Meanwhile, only 19 per cent of all investors polled said they favoured a human adviser.

Brokerages in mainland China are faced with declining contributions from traditional brokerage services amid fierce competition.

As a result, many are focusing on boosting their wealth management capabilities in an effort to develop new growth engines and trim reliance on traditional services vulnerable to fluctuations in capital markets.

Trading commissions accounted for about 30 per cent of revenue at brokerages in 2017, down from 35 per cent a year ago, McKinsey said. It also marks a slump from 69 per cent in 2010.

Brokerage charges have been down trending in recent years, easing to 0.034 per cent in 2017, from 0.081 per cent in 2011, according to figures from McKinsey and financial data provider

The main businesses of securities firms include brokerage, underwriting, and proprietary trading.