UK-based robo-advisory firm Parmenion Capital Partners, which was acquired by Aberdeen Asset Management in January, is seeking partners in Asia as part of its expansion strategy.
“My idea of partners is to work with multinational medium to large[-sized] IFAs or large regional banks that want to expand in the robo-adviser market," said Rennie Miller, Parmenion executive chairman, who spoke on a panel at the 17th IMAS conference in Singapore yesterday. The firm hopes to leverage Aberdeen’s brand and relationships to secure partners in the region.
Miller said it would be exciting to work with Chinese companies such as e-commerce giant Ant Financial, search engine provider Baidu or insurance group Ping An. However, Parmenion hasn’t started any discussions with these firms. One company to have expressed interest is Japan’s Mitsubishi UFJ Trust and Banking, which has a stake in Aberdeen AM, he noted.
Parmenion does act as a robo-adviser to a small B2C client base, but most of its business involves helping IFAs, said Miller. The firm also works with insurance companies and building societies in the UK and has received inquiries from retail groups considering offering financial products.
Parmenion's discretionary fund-of-fund offering is run by an in-house 10-member team. It selects 600 funds from a universe of 6,000 using quantitative and qualitative processes. There are currently some 10-20 Asian or emerging-market funds, but no China-based managers. The relatively short track records of mainland players has prevented Parmenion from putting on them on its shelf.
The firm looks at 20 years of historical data and volatility as part of its selection process. It has around £2 billion ($2.8 billion) in assets under management, after recording new inflows of £750 million in 2015, a 50% increase on 2014.
Other fund managers in the fast-growing robo-advice space including US-based BlackRock, which bought FutureAdvisor last year, and the UK's Schroders, which in 2014 bought a stake in UK-based Nutmeg, reportedly beating Aberdeen to the deal. Meanwhile, Vanguard rolled out its own robo platform last year.
However, investment research firm Morningstar has argued that few robo-advisers would succeed, given the very low fees they charge and therefore the huge scale they require to be profitable.