research Market Intelligence /marketintelligence/en/news-insights/research/robo-advisers-catching-on-in-china-industry-looks-poised-for-growth content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List

Robo-Advisers Catching On In China, Industry Looks Poised For Growth

CUSIP Requests Surge in September Led by Higher Corporate and Municipal Totals

M&A Among Credit Providers to Accelerate Due to Pandemic, Dealmaker Says

Case Study: Leveraging a Comprehensive Alternative Investment Funds (AIFs) Scorecard

Amid Pandemic, Airlines Forge a New Survival Metric: Daily Cash Burn


Robo-Advisers Catching On In China, Industry Looks Poised For Growth

Chinese consumers appear to have a keen interest in robo-advisers, an optimistic sign for the growing number of financial institutions that are launching automated investment advisory services on the back of China's pilot mutual funds advisory scheme.

Roughly 38% of adult internet users in China are currently using robo-advisers, according to a 2020 survey from Kagan, a research division within S&P Global Market Intelligence. Interest was also remarkably high among non-users, with 68% expressing some level of interest in using robo-advisers. The survey defined robo-advisers as digital platforms that offer algorithm-based investment recommendations and portfolios customized to a user's investment objective, risk appetite and time horizon.

SNL Image

Overview of robo-advisers in China

While established players like Betterment LLC and Wealthfront Corp. have been in existence in the U.S. since 2008, robo-advisers are comparatively new in China, with players only emerging post 2015. Besides fintechs, Chinese banks and brokerages have also joined the fray.

SNL Image

Unlike their Western counterparts, which can make investment decisions on behalf of their clients, China-based robo-advisers tend to be more restricted. They typically provide portfolio recommendations but the investment decisions ultimately have to be undertaken by users due to regulatory limitations.

China's pilot launch of a mutual funds advisory scheme in October 2019 may, however, ease this restriction. The scheme will allow asset managers and fund distributors to provide customized investment advice and maintain discretionary control over clients' investment portfolios, which will be constructed with publicly offered mutual funds. Robo-advisers operating under this scheme will therefore be allowed to execute trades automatically without requiring client consent each time, providing a more seamless experience for users.

The China Securities Regulatory Commission launched the scheme with the aim of promoting an alignment of interests between investors and fund distributors. Traditionally, China's asset management industry has been sales-oriented, as fund distributors generate revenue from transaction fees on the products they sell. This scheme will see a shift toward a fee-based advisory model, with providers charging a fee of no more than 5% of the clients' net asset values in exchange for providing asset allocation services tailored to those customers' financial needs.

Mutual funds advisory scheme may propel growth in automated investment advisory providers

According to a June article from China News Service, at least 18 financial institutions have secured mutual fund advisory licenses to serve domestic investors. Chinese citizens had roughly 17.7 trillion yuan ($2.6 trillion) invested in publicly offered mutual funds at the end of July, based on data from the Asset Management Association of China.

The scheme appears to be driving growth in the number of robo-advisory providers, a trend that will likely benefit from strong consumer appetite for such services. Asset managers and fund distributors have been turning toward technology to deliver customized investment advice, which is perhaps a more cost-efficient and scalable approach to serving retail investors with smaller portfolios than relying on human advisers to provide offline advice.

Vanguard Group Inc. and Ant Group Co. Ltd., for instance, formed a joint venture last year to launch Bangnitou, a robo-advisory service which is accessible via Alipay. Launched in April, the feature saw strong traction, with 200,000 users investing a total of 2.2 billion yuan ($318 million) within the first 100 days, according to an Ant regulatory filing. This is more than twice the assets managed by Pintec Technology Holdings Ltd.'s Polaris, which was launched in 2016. Available to over 1 billion Alipay users, Bangnitou's appeal might be due to how accessible it is to smaller investors. It has a minimum investment threshold of only 800 yuan ($116), which is far below other services, and an annual fee of 50 basis points.

In August, Teng An Fund, Tencent Holdings Ltd.'s fund distribution unit, began a trial of its fund advisory services, which will be made available on Tencent's messaging app, WeChat, upon official launch. With over 1.1 billion WeChat users, the service may see a comparable uptake to Bangnitou.

Profiling robo-adviser users in China

Users of robo-advisory services tend to be younger (49% aged below 39), more educated (68% finishing tertiary education) and living in metropolitan areas with population of more than 5 million (54%). Interestingly, respondents aged 60 and above also showed considerable interest in robo-advisory services.

SNL Image

If we plot the monthly income distribution of our survey respondents, the distribution for robo-adviser users appears slightly skewed toward the higher incomes, suggesting that users are relatively richer than non-users. In particular, robo-adviser users had a higher share of respondents with monthly income of 50,000 Chinese yuan or higher compared to non-users.

SNL Image

Another factor that set robo-adviser users apart from non-users was their eagerness to test new products and advise others. Robo-adviser users were more likely to be early adopters of new technology (29%) compared to non-users (20%). Robo-adviser users also tended to own Apple devices. For instance, 20% of robo-adviser users said they owned a MacBook and 43% owned an iPhone, but for non-robo-adviser users these numbers dropped to just 5% and 29%, respectively.

Non-users seemed to be more cautious toward new technology, with 39% indicating that affordability and positive reviews were important before they tried new technology. Conversely, only 23% of robo-adviser users expressed similar inhibitions.

SNL Image

Data presented in this article was collected from the Kagan 2020 Consumer Insights survey in China. The online survey consisted of 1,000 adult internet users and was completed during the second quarter of 2020. Data from the survey has a margin of error of +/- 3% at the 95% confidence level. Percentages are rounded up to the nearest whole number.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.

Robo-Advisers Catching On In China, Industry Looks Poised For Growth

Click here
Learn More About Market Intelligence
Request Demo

Investments in Southeast Asian, Australian Fintechs Propped up Funding in Q2

Read More

Asia Pacific Markets Monthly Newsletter September 2020

Read More