PARMENION Capital Partners, one of the largest robo-advisory firms in the UK, is keen to expand in Asia.
The company’s executive chairman Rennie McArthur Miller said expansion could take the form of its business model in the UK where it works with financial advisers (FAs) to provide a platform for fund selection and model portfolios.
It could also take the form of providing financial technology to institutions such as banks. Parmenion, which has assets under management of about £2 billion (S$ ), was acquired by Aberdeen Asset Management last year. The past year has seen a wave of acquisitions by asset management firms, keen to establish a foothold in financial technology. Schroders, for instance, invested in Nutmeg; Blackrock has FutureAdvisor. Vanguard rolled out a hybrid robo-human money management service last year.
Mr Miller said: “If we do business in Singapore we would look to work with financial advisers. We need a reasonable size in terms of client base.’’ On providing an IT platform for banks, he said: “Traditional banks think they can do it themselves... But it could take years and an investment of US$300 million. Wouldn’t it be better to outsource the system and share the fees?’’ He adds: “We write our own software and control our destiny that way.”
In the UK, Parmenion’s platform enables FAs to tap the majority of clients who may be fairly inactive. “Most FA firms have the 80/20 rule. They look after 20 per cent of clients who make 80 per cent of their income. And 80 per cent of clients are in filing cabinets. We look after those clients in filing cabinets.
“We make the FAs’ business more scalable, more efficient. In the UK it has been a very successful model for us.”
Robotics are used in the fund selection process, scouring more than 6,000 funds with track records as long as 20 years. Clients are taken through a risk profiling and suitability report. Its service has been described as the first fully online simplified advice, enabling advisers to offer a low-cost service.
Parmenion also has a B2C platform called Wealth Horizon, but it has not made much impact even though web traffic may be high.
“People go on the platform at all times of the night. They look at the underlying stocks, spend a lot of time and never put any money up. We still think the trigger to put money up is a human. The FA community is important.”