Risk-profiling firm FinaMetrica has predicted that all major financial institutions will adopt a robo-advice function by 2017.
FinaMetrica made the prediction as it announced a collaboration with NBK Private Bank Switzerland that will see robo-advisory tools rolled out to NBK’s private bankers by the end of the year.
FinaMetric co-founder and director Paul Resnik said the robo-advice tool was developed to deliver suitable financial advice to NBK’s clients.
“We are convinced that robo-advice will have its most effective application in conjunction with personal advisers working with existing enterprise clients,” Mr Resnik said.
“NBK’s private banking clients on average invest close to US$5 million, despite the popular myth that most people using robos invest much smaller amounts of money.
“We expect that every major financial institution will have a form of robo-advice in the next two years.
“We believe that we offer the most defensible and reliable suitability tool set, which is at the heart of good robo-advice,” Mr Resnik said.
A spokesperson from NBK said: “This robo-adviser delivers a multi-asset portfolio that meets most clients’ needs.
“The process still provides flexibility to fine tune recommendations to meet customers’ individual circumstances.”
FinaMetrica’s robo-tool is based on a 12-question scientific risk tolerance test that takes into account investors’ time horizons, capacity for loss, risk tolerance, and knowledge of investments. The end scores are mapped and paired to international multi-asset portfolios.