Liu Minxia

    mllmx@msn.com

    IN the near future, instead of calling or meeting with a flesh-and-blood investment advisor, the majority of Chinese investors may turn to an app for a tailor-made investment portfolio. A number of Chinese companies are already rushing into the area which has seen rapid growth in the United States, a forum was told Saturday.

    The so-called robo-advisors began to deliver money management services in the United States about 10 years ago and gained popularity three years ago, said Frank Wang, a managing director with CreditEase Wealth Management, a Beijing-based company that majority owns New York Stock Exchange-listed peer-to-peer lender Yirendai Ltd.

    U.S. companies like Betterment and Wealthfront are leaders in the area, offering portfolio management online without human involvement at a price substantially cheaper than portfolio management with an investment advisor. These firms are using algorithms based on modern portfolio theory, much like many investment advisors.

    The U.S. market of online investment advisory industry has grown to US$19 billion within three years and is expected to reach US$2 trillion by 2020, according to Wang. In China, the robo-advisor market is just starting, with a number of companies rolling out applications to test the water.

    In late May, CreditEase launched its smart investment advisor app called Toumi RA and Wang said it has been well-received by the market. For the time being, Toumi RA focuses on helping residents in China making overseas investment, according to Wang.

    “Robo-advisors are just beginning to gain traction in China,” said Wang. “Young tech-savvy investors are among the first to try it, and there’s little doubt that they will be transformative in the investment advisory industry.”

    An interesting example given by Wang is that robo-advisors beat human investment advisors worldwide in face of market turmoil brought on by Brexit, with human investors seeing a drop ranged between 4 to 12 percent on the day of Brexit, in contrast to a 2.5 percent drop by CreditEase robo-advisors.