Week8 2019 - Week 1 PDF

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ADVANCED INVESTMENTS 8

PROF. PETER BOSSAERTS VERSION: 2019

SCHEDULE: ROBO-ADVICE A. Some Statistics

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B. Your Contributions

A.

Some Statistics

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US PERSPECTIVE • Forty years ago, most Americans relied on Social Security and. employer-sponsored pension plans • Now, 90% of employer-sponsored retirement plans are IRAs, which require considerably more decision making (Poterba, Venti, & Wise (2008)) • This has spurred the growth of the investment advisor industry in U.S.

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UK/CANADA PERSPECTIVE • 53% of investors in the UK utilized an investment advisor at least once from 2012-2015 (Mintel Report, 2015) • Nearly half of Canadians surveyed indicated they used a financial advisor (Investment Funds Institute of Canada report, 2012)

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RESULTS • Unfortunately, financial advisors can be costly, and therefore. unavailable to low-income investors ("Advice Goes Viral", Ernst and Young report) • Robo-Advisors, a FinTech development, fill this niche by providing low-cost investment advice • They are popular and growing, but not as fast as one would expect

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RESULTS • Robo-Advisors had in excess of $181 billion in AUM in 2017 in US (S&P US FinTech Market Report, 2018) • Projected to grow to $600 billion by 2022 (>$2.5 trillion globally so LESS than the size of superannuation in a small country like Australia?!) • This raises several questions about the efficacy of Robo-Advisors… • … and where to improve things

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SO:

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WHAT IS YOUR SUGGESTION?...