Technology is starting to have a major impact on the financial market with digitisation and financial innovation developments taking place in the market, said Securities Commission Malaysia (SC) chairman Ranjit Ajit Singh.
He said these developments provide greater democratisation of the market by disrupting traditional channels of intermediaries, hence enabling investors to benefit from greater access and cost savings.
“In emerging markets where a legacy structure is not in place, technology leapfrogging allows many of these markets to embrace technology and digital media at a more rapid pace,” he said.
Ranjit said asset management firms globally are increasingly integrating automated investment tools such as robo-advisors into business models as the cost is lower, besides being convenient.
Digital wealth management assets are projected to reach between US$55 billion (RM196.42 billion) and US$60 billion this year, up from US$16 billion as at the end of 2014, he said in his keynote address at the 2015 Ifie-Iosco Global Investors Education Conference today.
However, he said there are concerns that the different algorithms used by robo-advisors can result in significant differences in portfolio recommendations, hence investors need to be appropriately equipped with the knowledge to engage in this platform to discern different recommendations and assess the risks involved.
He said the challenging external landscape, with uncertainties surrounding the global economy, is affecting the overall confidence of investors, who are more vulnerable as well as prone to make irrational investment decisions.
Investor education and empowerment are critical to ensure they are equipped with the relevant skills and knowledge to navigate the complexities of the market and to make informed investment choices irrespective of the environment they operate in, said Ranjit.