Robo-advisors are popping up left and right, with newcomers and established banks both in the fray. With the value of the digital advice market recently projected to crest $500 billion by 20201, it seems certain that robo-advice is more than a fad. Experienced asset managers now have the challenge of fitting into a marketplace that is reinventing itself, and the trick will be leveraging their own assets... that is, their client bases and market knowledge.
Indeed, a recent KPMG survey indicated that a high number of banking clients would be interested if their bank offered a digital advice investment option: this includes 75% of the total respondents, rising to 80% among millennials specifically. Newcomers have to face the uphill brand-recognition battle that all newcomers face, whereas banks and other older finance players have already fought this battle—for them, building the right product to connect with their potential user base is the key step.
In doing so, it seems that user experience is a foremost priority, along with keeping the cost low for customers. Certainly, the algorithms running robo-advisors are not particularly new, and many wealth management firms already have the knowhow they need for such a product, but lack the skillset amongst their people to build and maintain a clean and fast digital platform.
The revolution will be televised
If your product isn't all over national television, you may now be considered to be behind in the game. Why? Because Nutmeg, the UK-based online discretionary investment management company, has just tipped us over into a brand new world of online investment funds.
The company recently launched a mass-media TV campaign, its first, featuring two cartoon characters named Nut and Meg. To this they will add advertising space on the London Underground and the National Rail network, and in the press.
Nutmeg is part of a new wave of online asset managers who appeal to everyday people who don't know or want to know the technical jargon of the wealth management industry. Investor behaviour is changing with the times and companies like Nutmeg, Betterment, Wealthfront, and a host of others including large banks are chasing what one Nutmeg advert calls "a new kind of investor, a generation defined by the belief that technology can empower us to better results."
Talk is talk, but the fact that Nutmeg has already decided to invest so much in TV advertising suggests that their executives feel that a new, young demographic is really and truly within reach. Right now, today—the advert came out three days ago. The cartoon characters in the new advert certainly appear to be targeting a younger crowd than the prototypical stock-savvy investor. Could there really be legions of young investors out there who are currently unaffiliated with the investment industry... but would want to be? Nutmeg seems to think so.
1 "2,500% asset growth projected for robo-advisor platforms—according to Cerulli Research" (Investment News, November 4, 2015)
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