The world’s first bionic advisor designed for the high-net-worth market has been launched by Singapore-based advisory firm Bento. So how does it work?
The new service, which has on-boarded its first clients and is now managing their assets, uses a proprietary robo algorithm to create a tailor-made portfolio for each individual investor, the firm said in a statement.
Recent research, (Cap Gemini’s World Wealth Report 2016), has found that almost 80 percent of high net worth individuals in Asia Pacific are open to having a portion of their wealth managed by an automated advisory service.
As part of this new offering, Bento will be working with Willis Towers Watson (WTW) who will provide forward looking fundamental research on the expected behavior of various asset classes.
Tenets of Behavioral Finance
The proprietary tool created by Bento combines fundamental research with customer's objectives that are tagged to their risk appetite. Risk is calibrated according to a client’s ability to ride through a market correction, defined as drawdown rather than standard deviation. Bento uses tenets of behavioral finance to determine client’s risk taking ability and portfolios are calibrated accordingly.
The investment engine constructs portfolios for the long term but keeps an eye on short term market dislocations. Investment decisions are based on strategic allocation inputs with a quarterly dynamic asset allocation overlay.
Investments Exclusively Into ETFs
Inputs in the optimizer are fundamentally driven and human led. The client interface has a strong human element for both advisory and discretionary mandates from Bento’s advisors.
Investments are made exclusively into ETFs that are selected on the basis of high liquidity and low fees with a construct to minimize withholding taxes accrued in other jurisdictions. The firm believes Singapore is the ideal location for the bionic advisory service given its position as a wealth management hub and its focus on fintech.
Rapid expansion Plans
«We have created a new category in the vibrant robo advice market focused entirely on the high net worth, rather than the retail segment. We are overwhelmed by the client response. Therefore we are planning to expand into Hong Kong, the Middle East and certain European markets,» said Chandrima Das (pictured), Bento Co-Founder and Chief Executive Officer.
