Global Trustee and Fiduciary Services News and Views Issue 50

Prime, Futures and Securities Services | Financial Innovation 56 AI and attracting a new generation of investors But perhaps the most crucial way that asset management firms can look to leverage technology into new opportunities is to apply technology as a method of enticing a younger generation of investors on whom firms have, so far, not been able to fully capitalise. As millennials who have grown up surrounded by technology become an increasingly larger proportion of the investing public, asset managers will need to align themselves with the trends this generation brings with them. The data provider Pitchbook calculates that this generation currently holds around USD1 trillion in wealth, but has invested less than USD250 billion of it. 7 One priority for attracting this younger tech-savvy investing audience must be the development of mobile applications and similar tools. Industry experts have identified mobile applications as a major area of potential growth for asset managers. Such technology promotes new channels of access for clients who would perhaps profiles and use it to recommend investments to clients. Robo-advisers can even be used to maintain investment portfolios by making automatic investment decisions based on the individual profile created for each client. Utilising these robo-advisers for clients not looking for a more actively human managed investment, firms can potentially reduce their costs by allowing staff to focus on tasks that require human interaction, such as more complicated management tasks and crucial client relationship work. The utility of these advisers isn’t mere speculation — Legg Mason Global Asset Management’s 2016 survey reports that nearly 85% of UK-based investors born between 1980 and 2000 would be comfortable with such a programme managing their investments, which contrast markedly to the 35% of investors born between 1940 and 1960 saying the same. 6 With firms such as Morgan Stanley and Wells Fargo using robo-advisers to great effect, there’s clearly great potential for these programmes and algorithms in the asset management industry. ONE PRIORITY FOR ATTRACTING THIS YOUNGER TECH-SAVVY INVESTING AUDIENCE MUST BE THE DEVELOPMENT OF MOBILE APPLICATIONS AND SIMILAR TOOLS.