TCF2016-E2: Robo-advisors and automation...Robo-advisors and automation Opportunities in the new digital investment landscape Jeremy Boot Breakout E2 19.05.2016 #TCF2016#TCF2016 Part

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Robo-advisors and automationOpportunities in the new digital investment landscape

Jeremy BootBreakout E2 19.05.2016

#TCF2016#TCF2016

Part 1

The Robo-advisor landscape

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Robo-advisor

Core investment

management

Automated technology

Digital offeringLow pricing

Simple UI’s

Robo-what? 3

Robo-advisors are a class of financial adviser that provides portfolio management online with minimal human interventionForm Wikipedia, the free encyclopedia

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The hype

55-60 billionforecast for digital advice AUM by end 2015‘Robo-advising’ – KPMG, 2016

$2 trillion Robo-advisors to run by 2020 if this model is right‘Bloomberg Business’ – 2016

$7 trillion AUM forecast to grow to in 2025Robo-advisors: The Hype, the Reality and the Future’ – Gartner, 2016

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$55-60 billion, forecast for digital advice AUM by end 2015‘Robo-advising’ – KPMG, 2016

Robo-advisors to run $2 trillion by 2020 if this model is rightBloomberg Business, 2016

AUM is forecast to grow to … $7 trillion in 2025‘Robo-advisors: The Hype, the Reality and the Future’ Gartner, 2016

The hype

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Digital entrants 6

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The market is generalising and no longer limited to start-ups with wealth managers … bringing investment dollars and distribution to the robo-advisor space

‘Robo-advisors. Capitalising on a growing opportunity’– Deloitte, 2015

It’s not just about start-ups 7

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Disruption is here…and there is massive potential 8

only 20% of mass affluent americans have a financial advisor

An untapped market open to a low touch digital offering

“ ”Mass affluent households (US$250k - 1m in assets) hold about US$7 trillion of wealth.‘Advice goes virtual’ – EY, 2015

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Investment automation across the spectrum 9

Fully automated Hybrid: Advisor assisted Advisor led

Wealth SegmentationMass Market Mass Affluent HNWI UHNWI

‘Robo-advisor’Digital-only channel

‘Robo-advisor’Digital + RM contact

Traditional model+ Digital

Risk profilingTarget asset allocationAutomated rebalancing

ETF’s

+ Virtual meetings

Investment ProposalFull range of investment

vehiclesAdditional services (e.g.

financial planning)

+Personal relationship

Face-to-face meetingsIn-depth review

Full private banking services

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Although it is only the beginning, wealth managers should react, as this hybrid service model will likely become the new-norm

Hybrid: the future of advisory? 10

“ ”‘Robo-advisors. Capitalising on a growing opportunity’ – Deloitte, 2015

Hybrid Robos will Manage 10% of Investable Assets by 2025“ ”‘Hybrid Robo-advisors for Wealth Management and Banking’ – MyPrivateBanking research, 2016

Few individuals are willing to rely completely on roboadvice

“”‘Robo-advisors: The Hype, the Reality and the Future’ Gartner, 2016

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Part 2

Temenos’ vision for Robo-advice

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Automated investment management offerings

Temenos’ vision

Full range covered

Wealth Suite

integration

Attractive, intuitive

UXMulti-

channel

Modular approach

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Core investment process 13

Client profiling

• Questionnaire covering risk appetite, instrument knowledge & investment objectives

Strategy allocation

• Algorithmic assignment to Investment strategy

• Includes asset allocation and instrument lists

Optional refinement

• Option to refine risk level

• Option to revise asset allocation weights

• Option to revise instrument selection

• Option to set instrument white & black lists

Automated rebalancing

• Periodic and on-event automated rebalancing

• Automatically generated proposal

Order proposal

• Automatically generated proposal

• User alert• Manual

refinement• Order

validation

Alignment check

• MIFID checks

Order submission

• Confirmation of order proposal and placement

Fully automated

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Core investment process 14

Client profiling

• Questionnaire covering risk appetite, instrument knowledge & investment objectives

Strategy allocation

• Algorithmic assignment to Investment strategy

• Includes asset allocation and instrument lists

Optional refinement

• Option to refine risk level

• Option to revise asset allocation weights

• Option to revise instrument selection

• Option to set instrument white & black lists

Automated rebalancing

• Periodic and on-event automated rebalancing

• Automatically generated proposal

Order proposal

• User alert• Manual

refinement• Order

validation

Checks

• MIFID checks• Order checks

Order submission

• Confirmation of order proposal and placement

Fully automated

Hybrid / advisor assisted

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Additional features – WealthSuite Channels 15

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Additional features – Portfolio Consolidation 16

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Additional features – Portfolio Analysis 17

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Additional features – Reporting 18

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Additional features – Secure Messaging 19

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Portfolio rebalancing mass processing

Configurable rules to determine rebalancing frequency

Alert generation for order proposal

Periodic reassessment of user profiling

Volume handling

System functionality 20

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Integrated goal-based planning

3rd party account aggregation

Digital communications

Currency hedging

Management monitoring and reporting

Possible future evolutions 21

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Robo-advice is here to stay

Different segments have different needs. There is space for a range of offers.

You need to be present to stay competitive

Temenos offers the integrated product set to help you succeed

Conclusions 22

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Don’t forget! 23

Join the conversation – Tweet or Facebook post the #tcf2016

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Thank you