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Three Major Problems Facing the Development of Robo-Advisor


Three Major Problems Facing the Development of Robo-Advisor

Zhang Chenghui, DRC


The essence of robo-advisor is to make service more personalized and big data more efficient by using artificial intelligence and embedding the algorithm technology of artificial intelligence and automation into the field of investment adviser. It’s very promising to use artificial intelligence technology in China. However, the development of robo-advisor here still faces many challenges. First, the development of China’s financial market is not adequate. Foreign robo-advisors are mainly passive, which means that they are concentrated in exchange traded funds (ETF) by using algorithm technology to allocate ETF throughout the globe, while China’s financial market has merely over 100 ETF funds and focuses more on active robo-advisors. Second, the public investors in China are not mature in the sense that they do not have long-term investment plans and are unwilling to take investment risks or bear the cost of investment. Third, strong capacities in terms of asset management and allocation, large amount of unstructured data and data processing as well as sophisticated artificial intelligence model are required for service agencies to offer robo-advisor services. Moreover, since domestic investors haven’t formed the awareness of paying for investment adviser service, it’s hard for investment advice to develop on the buyers’ side. Besides, investment advice on the sellers’ side is always relevant to fund sales, which has made supervision more difficult.

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