The SEC is cracking down! Will “robot finance” be caught in one pot?
AsiaIndustrial NetNews: The explosion of artificial intelligence in China’s financial market is now facing a major test. Robo-advisor sales funds such as Wealth Cube and Latte Wealth Management are suspected of violating regulations and have been named recently.
On April 13, a message released by the Shanxi Securities Regulatory Bureau was posted on the website of the China Securities Regulatory Commission, which shocked the entire wealth management sales market!
“The robo-advisor sales fund is suspected of violating the rules, and the China Securities Regulatory Commission will investigate it!” The article mentioned that among the robo-adviser sales funds, the internet platform conducts public fund sales activities without obtaining the qualification for fund sales business, and cites two A typical example – Money Cube and Latte Money Management.
One stone into the water, startled a group of gulls and herons! The entire domestic wealth management sales market has exploded. Is this a violation of the third-party drainage model? Can the license plate plug-in continue to operate? This has become a core topic in the robo-advising market.
With the tightening of supervision, the “shell” fees of independent fund sales agencies have risen all the way, and the license price has risen directly to 70 million. But the entire independent fund sales agency only makes money from one or two companies, and most of them lose money and make money.
What is a robo-advisor?
“The father of global asset allocation” Gary Brinson said, “The most important thing in making investment decisions is to focus on the market and determine the investment category. In the long run, about 90% of investment returns come from success. Asset allocation.”
Foreign countries have set a precedent, represented by Wealthfront, motify, and Betterman in the United StatesrobotInvestment advisors and AI investment advisors are developing rapidly. There is no doubt that the success abroad has pointed out the direction for domestic exploration in the field of robo-advising, and the domestic market space will be broader.
Let’s first take a look at what a robo-advisor is?
A simple understanding is that through big data analysis and technical methods, services such as traditional investment advisors (personal asset analysis, risk preference analysis, asset allocation, portfolio recommendation) and other services can be turned into services directly available on the Internet.
To put it more simply, it is to help you allocate assets, avoid risks in time, and quickly capture opportunities when there are opportunities. Compared with traditional manual investment advisors, the advantages of robo-advisors are mainly to save costs, improve efficiency, and meet individual needs.
Financial Rubik’s Cube and Latte Financial Management are Negative Models
Let’s take a look at this article published by the SFC first. (Shanxi Securities Regulatory Bureau 3.15 Investor Protection Sunshine Action Month) “The robo-advisor sales fund is suspected of violating regulations, and the China Securities Regulatory Commission will investigate it!”
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At present, there is a robo-advisor sales fund model in the market, and there are three main types of operation models:
One is to completely imitate Wealthfront, Betterment and other companies that invest in ETF portfolios, such as Micai, Caijing, etc., limited by the type and quantity of domestic ETFs, these two companies directly match ETFs in foreign developed markets to customers to achieve the purpose of capital allocation;
The second is to use funds as the target of constructing investment portfolios to achieve the matching of customers’ risk preferences, representing the company’s wealth management cube and Qianjing private wealth management;
The third is to follow-up on quantitative strategies and investment celebrities’ stock portfolios, as well as an online investment exchange platform with a forum nature. Currently, it is well-known and recognized in the domestic investment research circle, representing companies like Snowball and Jinbeta.
Among them, Money Cube is now narrowing its coverage, focusing more on the coverage of fund products, and has established a list of fund products of different varieties (bonds, currencies, etc.) and different frequencies (daily, monthly, annual).
In reality, such as the wealth management cube, its trading system is connected to the purchase port of Yingmi Wealth Fund; Latte wealth management, in addition to the robot wealth management page, there is also a financial supermarket page. According to its website information, its fund sales service is jointly provided by Latte Finance and Shanghai Tiantian Fund Sales Company. The above-mentioned Internet platforms have not obtained the qualification for fund sales business.
On August 19, 2016, the spokesperson of the China Securities Regulatory Commission stated that those who engage in the sales of publicly offered securities investment funds without being registered with the China Securities Regulatory Commission will be punished by the China Securities Regulatory Commission in accordance with the law. Once it is found that the Internet platform is not registered and conducts public offering securities investment fund sales activities in the name of robo-advisors, etc., it will be investigated and punished according to law.
I would like to remind investors that at present, the network technology is developed and various websites are emerging one after another. While enjoying the convenience of the Internet, you must keep your eyes open when purchasing funds to check whether the website is qualified for fund sales. If not, do not purchase funds through it. products to prevent damage to your property.
where is the problem? Violation of the third-party drainage model?
The third-party drainage model does not work? Where is robo-advisor sales headed? Once the China Securities Regulatory Commission’s article came out, the robo-advisor industry exploded.
“We are also very puzzled.” The relevant person of Yingmi Wealth Fund said that the cooperation between Wealth Cube and Yingmi is a drainage model, that is, the Wealth Cube trains and educates investors on investment concepts, and the fund transaction service jumps to Yingmi. M Fortune’s page.
Through the relevant pages of the Money Cube, I did see prompts such as “You are about to enter Yingmi Wealth for fund trading operations” and “click to enter”. Actions such as opening an account, tying a card, and trading are all performed on the page of Yingmi Wealth. Currently, Yingmi Wealth Fund has a fund sales license.
Robo-advisors face reshuffle risks
In the past two years, the most popular discussion in the investment community is the robo-advisor. This overseas model has continued to evolve and develop in a Chinese style. Previously, most third-party financial institutions participated. In the past two years, banks, securities companies, and fund companies have Get involved, it’s lively.
At present, almost all domestic robo-advisors are free.
“Once the requirements are effectively implemented, the robo-advisor industry will usher in a round of reshuffle.” A senior industry insider said that robo-advisors must also establish an investor suitability system in accordance with the corresponding laws and regulations of the China Securities Regulatory Commission. It is necessary to deeply understand and segment users and sell the right products to the right users.
Fund sales profit is meager, licenses soar to 70 million
How many fund sales licenses are there now? Let’s go to the data published on the website of the Securities Regulatory Commission to see:
1. There are 141 commercial banks
2. 99 securities companies
3. 18 futures companies
4. 4 insurance companies
5. Insurance agency companies and insurance brokerage companies (5)
6. Securities investment consulting institutions (6)
7. Independent fund sales agencies (107)
“Fund sales are not profitable now, especially for independent fund sales agencies, it is more difficult to make money, that is, one or two companies.” The person in charge of an insurance agency company in Beijing said that fund agency sales are also dependent on the sky. , the profit is too thin.
Although the sales department makes money, the fund sales license is flourishing. “It’s 70 million yuan now, and I have to think about it again!” The person in charge of a licensed fund sales company said frankly that a fund sales license had already asked for 50 million yuan last month.
In the past two years, the price of fund sales licenses has been rising, and it was only more than 20 million yuan at the end of last year. Looking back at the end of 2015, the fund sales license was once sold for 5 million and no one cared, but now the price has been soaring and it is still hard to get it. As the regulatory authorities have tightened requirements for third-party sales agencies in terms of sales, promotion, settlement, and risk control, few agencies have obtained new licenses.
Statistics show that in the first nine months of 2016, the number of independent fund sales agencies that obtained licenses were 9, 6, 5, 2, 0, 3, 1, 2 and 1 in sequence, basically showing a gradual trend. Monthly downward trend, and from September last year to the present, in the past five months, not a single license has been issued. Until February 6 this year, the local securities regulatory bureaus stopped the “direct sales agency business”. It can be seen that there will be a situation where “one license is difficult to obtain” for public fund licenses.
Is “robot finance” reliable?
Like many financial products that are prosperous in China, robot robo-advisors are also imported products. It is a combination of artificial intelligence and finance, and it belongs to an online wealth management service. Simply put, the computer replaces the human to help you invest and manage your finances.
Is the robot financial management ineffective? Can it really be better than the human brain?
For “robot finance”, I feel that we can’t blindly worship it. No matter how powerful a machine is, it can only be regarded as an extension of the wisdom of the human brain.
However, there is no doubt about the advantages of robot financial management. Traditional financial planners may be forced to recommend inappropriate financial products to users under business pressure, deviating from the original investment intention. However, robot investment advisors avoid the problem of human emotional fluctuations and are more objective and responsible. Make judgments based on actual market conditions and avoid human factors.
Secondly, it can quickly make decisions from massive information, realize real-time management of financial management, and be more efficient. In short, robot financial management is based on data, and correspondingly, the cost is lower than that of labor.
It sounds so high-energy, do you dare to hand over investment and financial management to Robots?
In developed countries such as Europe and the United States, the use of big data mining analysis, large-scale computing and other Internet technologies to lower traditional financial thresholds and improve financial service efficiency has long been a trend.
Briefly introduce a process of foreign robo-advisors: first, collect user information, including financial management level, risk tolerance, financial management goals, etc., and then based on the information and plans provided by users, use calculation models to simulate and calculate the market value of the client’s investment portfolio. Benefit from good, fair, and bad performance, and ultimately let the user decide.
The next step is investment tracking. After the investment portfolio is in operation, it provides users with real-time operational investment advisory services, such as adjusting the investment period, reducing the target amount, and adding an investment.
Looking at the domestic situation, there are now more than ten Internet financial platforms and financial technology companies equipped with Robotic financial management tools.
However, platforms that do not live up to their name can be seen everywhere. Many platforms have products configured with many products on the surface, but only one or two types of assets are actually invested in. The real purpose is to sell mutual gold products.
Moreover, the so-called technical approach is limited to moving traditional financial products to online sales. The intelligent decision-making ability of real computers is only a reference for assisting fund managers to make investment strategies, and most of the time, human intervention is still the main method.
It is no exaggeration to say that some domestic platforms can wear a robot financial hat to themselves as long as they have computer programs involved in investment decisions.
Their so-called intelligent investment can be roughly divided into two categories: the first is to use the characteristics of fast computing speed and large amount of information processing to conduct real-time analysis of market information and make investment judgments. The purpose is to pursue high returns on investment. The programs are developed by hedge funds to obtain high returns, but these strategies are the secrets of the hedge funds themselves. Can you use them and dream about them?
The second is to use the computer to make asset allocation recommendations based on the user’s risk preference, ability to bear, and future capital needs. In fact, most of the time, it is just a questionnaire.Among them, the computer is moreautomationThe role of (asset allocation has a set of classic theories and mathematical formulas, and the computer will calculate it for you), not necessarily how intelligent.
In general, domestic “robot financial management” has not really matured, because a real robo-advisor has to do two things. One is that the company uses technical means to control the funds of customer accounts. However, in the current domestic investment and advisory industry, it is clearly prohibited to move account funds, which is a dead end.
The second is to invest customer funds in certain types of assets through technical means. However, in the current situation in China, most asset types cannot be automatically invested in most assets through a certain interface. Stocks and funds are OK, but a lot of non-standard products are not, and the technology is not strong.
The concept of “robot financing” seems to be very high-level. At this stage, it is mostly a tool for companies to package themselves. It is difficult to judge the true and false and the level behind it, and it is difficult for investors to truly enjoy the good news brought by high technology.
Robo-advising is a hot concept right now. Compared with traditional investment advisory, which has high cost, few service objects, moral hazard, uneven ability, and single knowledge structure, robo-advising is objective, pays great attention to risk, has executive power and wide service coverage, and has low cost. The advantages. This is one of the reasons why robo-advisors have attracted the attention of many investors.
But at the same time, as mentioned in the above article, robo-advisors also have certain disadvantages. Such as malicious code, talent scarcity, legal risks, exaggerated propaganda, etc. A robo-advisor is a piece of software, but if it is a software, there must be certain loopholes. If someone uses the loopholes to modify the robo-advisor program, who will bear the risk? . The domestic legal supervision of robo-advisors is also blank. If moral hazard arises, there is no way to guarantee the rights and interests of investors.
In the final analysis, the current robo-advisory business in China is not perfect, and the current main responsibilities are still positioned to reduce service costs and improve allocation efficiency. It is still unable to truly manage assets and help users make money. Because in China’s current market, whether robo-advisors can be accepted by users is still unknown. Although robo-advisors are very promising, they still have to be chosen carefully.
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