Would you trust artificial intelligence to invest your hard-earned cash for you?
Robo-advisors are fast gaining popularity in Malaysia, and while the concept of digital wealth management platforms have been around since 2008, it has taken much longer for such services to reach our shores.
StashAway was the first robo-advisor to enter Malaysia in 2018, a year after it first launched in Singapore. Today, there are seven robo-advisors or digital investment managers (DIM) recognised by the Securities Commission Malaysia, suggesting that the industry is beginning to mature and grow exponentially. So what fuelled this sudden growth and how does it bode for the future of retail investors?
A Time-Saving Option For Investors
Contrary to a lot of investment products which tend to champion the rate of return, one of the main selling points of robo-advisors is the time that can be saved by using their services. The typical image of a full-time investor can often be one of multiple screens set up in a room, with hours spent analysing graphs and charts. In short, it is essentially a full-time job, especially for the most successful investors.
“To build a case for investing, an individual would need time to learn the in’s and out’s of investing, which can be overwhelming for certain individuals,” says Wong Wai Ken, country manager, Malaysia of StashAway.
“Robo-advisors offer individuals an alternative to this, as they are able to offer guidance to picking the right portfolio whilst charging much lower fees compared to traditional unit trusts. It is also a convenient manner to invest, as it gives investors a platform to get exposure to global markets.”
With such convenience at investors’ fingertips, it appeals greatly to individuals that are keen to save time and have disposable income that they can invest, a notion that is backed by the demographics.
“Our main demographic are white collar professionals in the financial services, tech, consulting, and oil and gas sectors,” shares Wong.
“64% of our customers are the main financial decision-makers of their household, while 43% are male and 57% are female. The range of our demographic varies however, as StashAway is built for those focused on building long-term wealth.”
And while a time-saving investment product may be thought of as appealing to the younger generation who are more tech savvy, it seems that seasoned working professionals are also coming round to the idea of alternative investments and are willing to explore. The time they save by leaving investing to algorithms can then be utilised elsewhere, be it into their careers, families or personal goals.
One of the key tenets of robo-advisors is that it is not swayed by emotion, unlike humans who are often influenced by market movements in either direction. Regardless of market sentiment, the AI simple executes buy and sell orders as determined by its risk algorithms, which can provide peace of mind for more passive investors.
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