Wealthtech firms poised to snap up to 10% of wealth manager assets

Robo-advisors are steadily luring the tech-savvy mass affluent.

Up-and-coming technology entrants that offer wealth management services to Hong Kong’s mass affluent and ultra-rich are expected to snap 5-10% of assets under management (AuM) from incumbents like private banks by 2023, according to a report by the Private Wealth Management Association and KPMG.

These includes robo-advisory companies or wealthtech firms that have tapped on emerging technologies like AI to manage the wealth of Hong Kong’s ultra-rich clients.

Also read: China's ultra rich poised to boost Hong Kong wealth assets by 50% in 2023

“Hong Kong is becoming a hub for a number of Wealthtech companies that are either serving or partnering with existing players or going to market directly,” the report’s authors said. “This brings welcome innovation to the industry, provides opportunities for incumbents to partner and learn from new innovation and offers clients a broader range of options to manage their wealth.”

The digital shift is evident as the wealth managers attempt to capture the next generation of ultra-rich who are more open to digital alternatives.

Also read: Hong Kong is home to seven in 50 of Asia's multimillionaires

As such, the report points out that wealth managers have been steadily stepping up investments in technology to provide enhanced digital experiences and cultivating a younger generation of wealth advisors that can better understand the needs of their clients.

The report also notes that WealthTech firms along with external asset managers or non-bank wealth managers are expected to cumulatively take 15-30% of AuM share by 2023, prompting incumbents to adjust their business models to defend segments most vulnerable to disruption.

Hong Kong has beat the commercial centers of New York, Tokyo and Los Angeles as it serves as home to the largest ultra-wealthy population in the world with the number of people with a net worth of over US$30m hitting 10,010 in 2017, according to a report from Wealth-X.