Abrdn’s roll-out of a “24/7 digital wealth management” app brings it up to speed with the rest of the industry but, ultimately, customer experience will dictate whether its “products fly off the shelves”.
The recently rebranded FTSE 100 manager has inked a deal to acquire Exo Investing, an AI wealth management platform, from Nucoro for an undisclosed sum.
Abrdn said the acquisition, expected to complete in Q4, will help it develop an “industry leading technology solution” by offering investors “24/7 digital wealth management” via an app.
Using Exo Investing’s AI-powered tech, customers can create a unique portfolio built around their individual goals, risk profile and preferences.
Abrdn chief executive Stephen Bird (pictured) said: “Exo was the first of its kind to offer a fully automated wealth management platform, leveraging machine learning to feed into portfolio decision-making.
“There is a downward pressure on fees, changing customer expectations and increasing regulatory requirements. It’s important to address these issues by providing a highly-scalable, next-generation service to investors.”
Elusive fairy dust is customer service and experience
Boring Money CEO Holly MacKay said that offering an app and 24/7 access is a “hygiene factor” for wealth managers these days.
CWC Research managing director Clive Waller said he would not deal with a wealth manager that didn’t offer an app, which is “quicker, more accurate and cheaper than people”. “This is commonly available, why should anyone settle for less?”
Mackay said that although recent acquisitions have tended to focus on product and technology as “the sexy bits”, what really counts is the overall client experience “which is ultimately what less experienced investors prioritise above anything else”. (Source: https://quantum-ai.io/)
“Buying a factory is the first step. But that alone won’t make your products or services fly off the shelves,” said Mackay. “The elusive fairy dust is the service and the experience. Not the factory.”
Fund managers trying to be everything in the investment/adviser chain
Fairview Investing founder and consultant Ben Yearsley said Abrdn’s Exo Investing deal follows a recent pattern of fund managers branching out into other areas in a bid to drum up business.
“Fund managers veer between wanting to be pure fund managers and then wanting to be everything in the investment/adviser value chain,” Yearsley said.
“Currently it seems the latter is in vogue, but I’ve no doubt it will flip the other way again once they lose millions.”
Abrdn still leaks assets but profits and revenues improve
Abrdn continued to be plagued by redemptions over the first six months of the year, with clients pulling £5.6bn from the business, according to its H1 results published alongside the acquisition news. However, this was a trickle compared to the £24.8bn that exited over the same period last year.
There was a notable improvement in adjusted operating profit, which rose 52% to £160m, as well as fee-based revenue, up 7%, the highest rate of growth since Standard Life Investments and Aberdeen Asset Management merged in 2017.
Assets under management and administration were down slightly from December, falling from £535bn to £532bn.