FINTECH

The Fintech revolution has this going for itself that it tries to address some legitimate investors' concerns regarding excessive transaction costs, management fees and dubious retrocession practices that have often been the hallmark of the past. Some players in the field have started catering to the needs of small investors by lowering fees on some manual asset management related processes  (such as asset allocation recommendations, quarterly rebalancing rebalancing, tax loss harvesting and dividend reinvesting) that would not have been accessible to them otherwise or that are quickly becoming unavailable from large banks that are reviewing their policies to discourage small accounts.

However, while human  advisers should pursue and guide reasonable expectations, with due consideration to the investment environment and in accordance with their clients' investor risk profile, it is illusionary to believe that robo advisers are able, in the current state of affairs,  to deliver alpha (added value not related to the directionality of the market) by themselves beyond reducing management fees and giving the impression to certain categories of investors that they can access prime private banking services for little or nothing. 

 

It is remains unrealistic in our view,  to believe that robos will be able to cope with the fast moving and increasingly twisted nature of financial markets that requires a dose of  contrarian investing that only seasoned investment professionals with a keen focus on markets have a chance to deliver. Most platforms also exclude the concept of stock picking which closes the door to the possibility of investing in special situations or value propositions.