Wealth Management is in a Quandary

Recently, we’ve seen Lloyds (UK) being fined £117 million in 2015 for failing to treat customers fairly and Wells Fargo (US) fined US$3 billion in 2018 for charging clients unanticipated fees.

There is a wind of change sweeping the wealth management industry – specifically regulations. Born out of the Great Financial Crisis in 2008, the emphasis on Caveat Emptor on sales of financial products has shifted to one of Treating Customers Fairly to Conduct Risk for the entire organization.

So where does that leave the rest of the financial industry?

Regulations in the Asia Pacific Region

The APAC region is definitely not immune to the impact. Just like the rest of the world, the region has been experiencing waves of new regulations demanding more transparency from financial institutions.

The market is highly fragmented with many different economies, so here are some examples of regulations that have been implemented by a few of the players.

Singapore and Hong Kong

These two markets have released guidelines to managers in regards to their fees for selling funds as well as providing clients with full transparency, and suitable products. It all comes down to the overarching idea of protecting investors and providing them with the peace of mind.

However, due to these regulations, both international and local wealth management firms operating in either of the two cities must invest significantly more in additional resources such as technology to monitor transactions, additional staff in the legal department, and compliance and risk management teams. As a result, approximately 15 banks have decided to close down and move out of these cities.

Japan

Japanese regulators have also released  guidelines for financial institution to follow with these seven overarching principles:

  1. Establishment and Announcement of the Policy Concerning Fiduciary Duties
  2. Pursuing the Best Interest of the Clients
  3. Appropriate Management of Conflicts of Interest
  4. Clarification on Fees
  5. Provision of Important Information that is Easily Understandable to the Client
  6. Provision of Services Suitable for Each Client
  7. Establishing the Framework for Appropriately Motivating its Personnel to Comply with Fiduciary Duties

Australia

There has been an increase in compliance, regulation, and technology costs- further narrowing the already tight profit margins.

Undoubtedly, this has put a lot of pressure on financial institutions across the regions. Even so, APAC’s prospect is still shining brighter than other regions of the world.

A Window of Opportunities for APAC

Like the old saying goes “when one door closes, another one opens”, and that door has opened for the APAC region.

Despite the ongoing pressure from regulators and investors, the APAC region is set for greater growth in the coming years. The market is dynamic and full of opportunities from developed markets like Australia, Japan, Hong Kong, and Singapore, to burgeoning markets like India and China. We’ll explore three major opportunities that wealth managers need to capture to drive Asia to the next level.

1. Passporting

The area of passporting is one that is expected to grow significantly over the coming years.

Currently, there are three schemes:

  1. ASEAN Collective Investment Scheme (ASEAN CIS) – consisting of Singapore, Malaysia, and Thailand
  2. Mutual Recognition of Funds (MRF) – cross-border mobility of assets between Hong Kong and Mainland China
  3. Asia Region Funds Passport (ARFP) – a multilateral fund passporting framework that covers Australia, New Zealand, Singapore, Thailand, South Korea, and Japan

 

Following the implementation of all three schemes, the total AUM of regional passport schemes is estimated to reach USD 11 trillion in 2025 from USD 6.7 trillion in 2017. The growth is most prominent in the MRF scheme as China starts opening its market to external investments (refer to Figure 1).

Figure 1: Asian fund AuM projection by countries in passport scheme for 2025
(Source:
PricewaterhouseCoopers, 2019)

2. Retirement Plans and Pension Funds

Japan, China, Singapore, Hong Kong, and Thailand are amongst the economies with the fastest growing aging population. However, according to OECD, only 26% of Asia’s working population and 35% of the labor force are enrolled in pension funds (refer to Figure 2). Now if we compare it to the 34 OECD countries, the averages are 65% and 86% respectively. Asia’s coverage is drastically low and that is mainly due to the large rural populations who do not have access to such services.

Figure 2: % of working population and labour force enrolled in pension funds
(Source:
Eastspring investments, 2019)

For major economies such as China and India, a slight shift in their growth will produce huge revenue for wealth managers. And that shift has already begun. In 2018, China launched the Third Pillar Pension Tax Initiative which encourages clients to invest in pension insurance products.

But then you may ask, what about those who do not have the assets to invest? Well, individuals will receive a deduction on their income tax so that they can invest in fixed-return, guaranteed-return, and floating-return products. And even better, at the maturity date, 25% of the benefit is tax-free and the other 75% is taxed at a very low rate.

As other countries start launching similar initiatives, the future of APAC’s pension fund growth is on a positive trajectory. By 2025, the total APAC pension fund AUM is estimated to reach USD 6.8 trillion, with a 3.5% compound annual growth rate (CAGR).

Figure 3: APAC pension fund AuM growth
(Source:
PricewaterhouseCoopers, 2019)

3. Digitalization and Millennials

Even amidst the uncertainty from geopolitical events and pressures from regulators, the APAC region has managed to keep itself relatively buoyed, but how?

The answer is technology and millennials. More than half of the global millennial population is in Asia, 58% to be exact. They are the investors of the future with the potential to bring wealth managers fortunes. As this younger generation enters the investment landscape, the need and importance of Robo-advisors will become more prominent- after all, they are known as the digital generation.

With the help of technology solutions like Robo-advisors, it has made it even easier for wealth management firms to increase scale and target new market segments. Even as services are being digitized, wealth managers must evaluate their value propositions to ensure that client’s experiences are of top priority.

Prior to digital wealth management platforms, customized investment strategies were only accessible by HNWIs or UHNWIs, but that is no longer the case. Robo-advisors have made personalized portfolios readily available to investors across the whole wealth spectrum.

The move to digitalization has already begun in the APAC region, all thanks to the favorable regulatory environment surrounding digital technology and Fintech solutions.

Specifically, in Singapore and Hong Kong, the regulations have established an environment where new innovations are highly encouraged and welcomed. Similarly, China has one of the largest digital distribution markets (delivery of products through digital means), a favorable position for wealth managers and investors to start their Robo-advisor journey.

 

The APAC Financial Hubs

Singapore and Hong Kong are the two leading financial hubs alongside New York and London.

The governments of the respective cities saw potentials in their markets and have continuously shown strong support for the industry. In return, the cities are attracting a plethora of multinational companies from all directions- venture capital firms, private equity firms, family offices, philanthropy service providers, and financial consultancy providers.

London, the second largest financial center after New York, had been facing a tremendous amount of pressure from Brexit. This means that massive funds were flowing out of the city, and Singapore and Hong Kong were and are in the perfect position to capture the outflows. As a result, over the last five years, the aggregated growth rate has consistently maintained in the double digits and is expected to stay that way.

With the current growth rate, Hong Kong and Singapore are poised to compete for the position of world’s largest offshore wealth management hub.

Technology and Regulation

As the financial industry expands into the digital world, the need for regulations has become even more prominent, especially in preventing financial crimes.

Regulations like Anti-money laundering (AML) and Know your customer (KYC) are not new to the financial industry. But with the introduction of Robo-advisor technology, the whole process has become far more efficient.

Integrating AML softwares into the firm’s strategy has been highly beneficial. Not only is it more efficient and precise, the solution is also able to analyze customer’s data and accurately pick out any discrepancies; suspicious activities can be immediately detected, reducing the potential for fraudulent affairs.

Meanwhile, the KYC procedures have been streamlined to just 3 simple steps:

  1. Select the proof of identity document type (passport, national identity card or driver’s license)
  2. Upload a photo of the selected document
  3. Upload a photo of them holding the selected proof of identity

With this, it has gotten more convenient, reliable and secure for both customers and businesses.

APAC in 5 years

Undoubtedly, the APAC region is abundant with diverse markets and potential for growth, making it the largest investment infrastructure region.

PwC predicts that APAC’s total AUM will reach USD 29.6 trillion by 2025, a CAGR of 8.7% from 2017. Now, this estimation is highly optimistic so if we take into account the possible geopolitical issues, the conservative estimation is USD 18.1 trillion by 2025. Even so, this growth is still higher than other developed regions such as Europe and North America.

With China opening up its economy to offshore investors, India pushing for economic liberalization, and the overall continued growth of pension plans across the region, it is accelerating people’s adoption of investing. The APAC wealth management market is one that wealth managers do not want to miss out on.

Take your first step into the Robo-advisory world with Bambu.

At Bambu, we specialize in developing Robo-advisory solutions for the financial services industry, from smaller RIAs and wealth advisors to some of the largest banks in the world.  We help our clients work through the above key considerations to implement solutions that truly benefit their wealth management business.

To find out more, check out our product here or contact us at sales@bambu.co for more information.

It’s the start of something new. 

What could lead an experienced finance professional and a serial software developer to “risk it all” by venturing into the world of startups? At age 50 and 35, respectively, Ned Phillips and Aki Ranin embarked on their entrepreneurial journey. 

The journey started with a dream to empower the future of digital wealth through their company. In their first year of founding, they launched the first robo-advisor in Singapore with Crossbridge CONNECT. Four years later, today, Bambu has $14M in funding, millions in revenue, and 18 clients worldwide. 

Why B2B digital wealth software (or Wealth-as-a-service)? The idea was sparked when Ned worked in a B2C fintech company and found banks always asking if their software could be sold to them. “This is an opportunity, why not get it started,” he thought as he witnessed deal after deal being turned away by the company then. 

 

From Finding to Founding

But who would do it with him? No suitable co-founder was in sight until Luke Janssen, a mutual friend, introduced him to Aki Ranin. At that point, Aki had spent twenty years in corporate life, “jumping to the tune of others”. He was done and wanted to build something of his own. Thinking about the same business problem, this meeting was a golden opportunity to build something good together. 

Most would not recommend founding a company with someone you just met. What more with differences in backgrounds (tech vs finance careers, grew up in Finland vs Scotland, “millennial” vs boomer). But where people saw differences, Ned and Aki saw synergy. Ned could bring the “fin” and Aki could bring the “tech” in fintech. Ned had the finance knowledge, selling skills, and vast network while Aki had passion, unique vision, and technical expertise. Their partnership was also guided by shared values like humility, positivity, honesty, hustle, humor. That was in 2016 when they decided to birth Bambu.

 

What shall we name it?

Deciding on what to name the startup was not an easy feat. The first name settled on was “Cache,” but it did not catch on. It got changed to “Mangosteen,” but Mangosteen also had to go (although its purple color remains till this day). Eventually, the decision was to settle on a plant-based name. Why may you ask? Well, the most successful robo-advisory companies in the US and UK are named Acorns and Nutmeg. Being headquartered in Singapore, choosing an Asian plant made sense. Since bamboo was fast-growing, sturdy, and prevalent in Asia, it was tweaked to become our name “Bambu.”  This is the spelling of bamboo in both Finnish and Bahasa and helps us set our brand apart online.

 

How far we have come 

In the past four years, the dynamic duo has led the company to raise $14M in funds (and to be backed by Franklin Templeton and Peak6) as well as growing it from 12 employees to the 70+ employees today. From Singapore alone to having offices in San Francisco, Dubai,  and London. Clients like Standard Chartered, HSBC, Beanstox (Kevin O’Leary), Franklin Templeton, BCA, and many others trusted and continue to trust Bambu to deliver the best digital experience for investors. 

 

What’s next 

For the next few years, Ned and Aki hope to bring Bambu to new heights to reach millions of users and empower them to save and invest for their future digitally. Becoming a real global leader in B2B Fintech and dominating as number 1 in the WealthTech category.  We remain committed to making Bambu the best possible place to work, and ensuring every employee has a share in our success through the options program.

Asia is Experiencing a Slump

By 2030 the world’s middle classes will number 4.9 billion and 66% of them will be in Asia. Boosted by the rise of income levels, Asia is poised to be the leader in the asset management industry as evident by the six consecutive years of growth, at an average of 15% CAGR.

Unfortunately, those golden years soon came to a pause. In 2018, the AUM growth was only at a paltry 5%; a drastic 10% decline in just one year.

So what happened?

Well, there are a few potential causes, namely:

  • A decline in market performance by an average of 3.2%
  • The weakening of Asia’s equity market that is highly volatile
  • The profit pool only grew by 3%, a significant decline from 14%
Source: McKinsey

But of course, that’s not all. Analysts have identified five major disruptions that can potentially have a bigger impact on the asset management industry if not contained soon.

  1. Increasing Cost Pressures – costs have risen swiftly by 25% over the last two years
  2. Margin Pressures on Traditional Products – firms are slowly moving to non-traditional offerings with a focus on passive investments
  3. Increased Demand for Pension and Insurance Products – Regulators across Asia are pushing for more mandatory/voluntary pension saving programs
  4. Increased Demand for Cross Border Products – Clients are demanding for broader global access, putting pressure on firms to find the best solution to meet their needs
  5. Progress of Digitalization – Adoption of digital channels has been slow, only 30% of firms say they are using or are installing digital tools.

Navigating the Disruptive Environment

These five disruptions will have a major impact on the economy and industry as a whole. Any failure to adapt to these changes will have major implications on firms, to the extent of possibly closing down the business.

In order to navigate through the disruptive and uncertain landscape, Asian wealth managers must equip themselves with the right set of capabilities. There are two priorities that wealth managers must focus on: gaining scale and digitizing operations to enhance productivity and optimize costs.

There are many ways to achieve both priorities but there’s only one that targets both concurrently. And that solution is integrating Robo-advisors as part of their service.

Gaining Scale 

Scale can be referred to as either the size of the business or the number of clients served and Robo-advisor addresses the latter.

It is able to do so by opening the opportunity to reach out to an untapped segment in the market- millennials.

Millennials, millennials, millennials. They’re everywhere now and are mentioned in nearly every single article, research paper, blog, etc. Are they overrated? Definitely not.
1.42 billion millennials in the world, 62% of them are in Asia – 880 million to be exact. They are the emerging middle class of Asia but due to their lack of assets, millennials often do not qualify for traditional wealth management and services. A good example would be the US – there are 92 million millennials but only 30 million are currently investing. Despite being the largest generational population, the number of investors are the lowest compared to Gen X and Baby Boomer generations.

Source: Accenture

Often known as digital natives, Millennials see innovative technologies as a necessity in all scenarios, including investment. Now if we break down the statistics of millennials relationship with finance, here’s what it shows:

  • 60% are keen to learn about how to better manage their cash flows and budget
  • 60%  feel that they have a good understanding of their investments
  • 67% want computer-generated recommendations- Robo-advisory services
  • 66% want self-directed investment portals while retaining the access to an advisor
  • 65% want access to platforms that will help learn more about investing
  • 63% want a mobile platform

In summary, there is no separation between millennials and technology, they come as a set. This makes it inevitable for firms to implement digital services into their offerings if they want to serve the investors of the future. Not only that, but millennials are keen learners, always on the lookout for new knowledge. It is no wonder that they are more financially prudent as compared to previous generations and making them the ideal clients for Robo-advisors.

Digitize Operations to Enhance Productivity and Optimize Costs 

The idea of optimizing cost and enhancing productivity through automation is nothing new. It was mainly associated with manufacturing and front-end customer engagement. However, the extent of automation is no longer limited to just those two aspects.

Digitalization and analytics have unlocked the full potential of wealth management offerings- both front-end and back-end processes.

Traditional wealth managers cannot compete with Robo-advisors when it comes to fees. According to a database of more than one hundred Robo-advisory providers charge an annual management fee of between 0.02% to 1% of the AUM, whereas traditional wealth managers charge a fee of about 2% to 3%. It is just impossible to compete with the low fees of Robo-advisors, mainly due to the nature of the service.

Then that poses the question of, how is it possible for Robo-advisors to charge such a low fee? Technically, the services offered are exactly the same, so the cost differs when it comes to the investment process. It is most evident in these three pillars of the business, personnel, operating expenses, and digitalization.

1. Personnel

It is of no surprise that personnel is one of the contributors to the high costs, wealth management has often been defined as the client relationship business. The advisor-client interaction is highly time-consuming, meaning that each advisor is only able to serve a very limited number of clients, a maximum of 150 clients to be exact. Additionally, each advisor must oversee approximately €100 million to generate enough revenue to cover the costs. Not only is it costly but it is also restricting the type of customers that advisors serve.

However, with Robo-advisors, personnel costs can be drastically reduced. Since most processes are fully automated, the classic role of a financial advisor is no longer needed. As a matter of fact, advisors will only need to oversee the process and intervene when necessary- more of technical support personnel than a financial advisor.

From 150 clients per advisor, with Robo-advisor it has increased to 20,000 clients per advisor- more clients served with fewer advisors. Even in more established Robo-advisory firms like Betterment, there are about 130 employees– still a fraction of the number of employees in traditional wealth management firms.

2. Operating Expense 

So what are some operating expenses? Rent, equipment, inventory costs, payroll, marketing, insurance, and resources for research and development are all operating expenses. Traditionally, wealth management firms require a representative building in major cities to be used for meetings with clients. But now that everything’s online, there is no longer a need for that.

Most Robo-advisors either work remotely or use co-working spaces with other firms, reducing costs of rental and increasing work motivation. In most cases, there’s also no need for fancy equipment, all they need is a desk and computer. And since everything is done digitally, marketing activities have migrated there as well. Not only is it more cost-effective but it has allowed firms to reach a wider range of clients no matter the geographic limitations.

3. Digitalization 

With Robo-advisors, everything can be digitized. Everything.

The front-end customer interaction is fully automated with user-friendly experience features. Clients can easily navigate through the platform on their own with support- live chats or chatbots- readily available if they need it. As chatbots are limited to the predefined answers that are available to them, most platforms have also provided clients with detailed FAQs to refer to.

As for wealth managers, they can now focus solely on customers. Ensuring that customers receive the best service and highest satisfaction. With more clients and a seamless investment process, wealth managers only need to manage less than half the AuM prior- €48.8 million to cover costs and operate viably.

Source: Deloitte

Overall, Robo-advisors can help cut down 60% of traditional wealth management’s costs mostly due to its lean organizational structure.

Starting the Engine Again

Despite the sudden slowing of growth and challenges that may come in the way, Asia is definitely a leader in the global wealth management scene.

Compared to the more developed regions like North America and Europe, Asia has stronger profit margins – 22.5 basis points (bps). It is double the margins of both North America and Europe, 11.1 bps, and 12.3 bps respectively.

Although it is a dominant region right now, Asia has yet to reach its peak. Integrating solutions like Robo-advisors will propel the region to even greater heights.

The opportunity is here, let us help you grasp it.

At Bambu, we specialize in developing Robo-advisory solutions for the financial services industry, from smaller RIAs and wealth advisors to some of the largest banks in the world.  We help our clients work through the above key considerations to implement solutions that truly benefit their wealth management business.

To find out more, check out our product here or contact us at sales@bambu.co for more information.

The Global Financial Crisis

The 2008 financial crisis was the worst economic disaster since the Great Depression, leaving firms and economies in shambles.

The main cause was the housing market bubble. People were borrowing more than they could afford to purchase bigger houses, which drove house prices through the roof.

While that was happening, banks were paving the way to their inevitable fall. More loans were being applied, causing banks to be overwhelmed and, and to start making moves based on impulse and speculations. As a result, many financial innovations were introduced, but it was moving way too fast and way ahead of regulations. Even the banks themselves were unable to keep up with the risks.

And that is when the bubble popped.

Financial institutions and banks alike did not have enough capital to combat the losses. And the global financial system wasn’t ready to absorb the shock. The aftermath rippled to all financial institutions across the globe.

New Regulations in the Regions

To prevent such an event from recurring, regulators and governments around the world have tightened their measures on financial regulations with emphasis on transparency and accountability.

Here are some regulations that have been implemented according to region:

Europe – MiFID II

The MiFID II was implemented by the European Union (EU) in 2018 to regulate financial practices and improve protections for investors. The main purpose of the framework is to standardize financial practices across the EU and regain the trust of investors, all through increased transparency.

The US – Department of Labour Fiduciary Rule 

The US Securities and Exchange Commission is re-evaluating the Department of Labour Fiduciary Rule with the main aim of developing a uniform fiduciary standard. The newly updated Fiduciary Rule will ensure that high commissions do not have any influence on advice provided to investors- following the initiative started by the UK Retail Distribution Review in 2012.

The Asia Pacific

Within the Asia Pacific region, individual countries have implemented stringent regulations built on four pillars: board effectiveness, risk and compliance, financial integrity, and disclosure and transparency.

Compared to the US and Europe, such regulations actually opened up new opportunities for investors and firms in the Asia-Pacific region.

How do the Regulations Affect Financial Institutions?

These new regulations are definitely putting pressure on financial institutions especially in terms of cost and profit margins.

Disclosure of Costs and Fees

As part of the aim to increase transparency, the regulations implemented require financial institutions to disclose all costs and fees. The MiFID II bans asset managers from paying retrocession– usually seen as non-transparent fees. Similarly, the US Fiduciary Rule requires firms to increase disclosures and voluntarily make statements more self-explanatory.

With such rules implemented, it has massive implications on customer acquisition capabilities. Under the new regulations, financial institutions will need to charge an explicit advisory fee and/or increase the brokerage fee to make up for the lost revenue from retrocessions. However, this also means that it is easier for clients to pick and choose. Thus, there is a higher chance of losing clients who are unwilling to pay such fees.

To counteract this problem, financial institutions need to adopt new cost-efficient advice models, such as Robo-advisor, so affluent clients can still obtain the same guidance even if the fees structure changes.

Higher Costs 

The disclosure of costs and fees bears another problem — higher costs for firms. There has been a rising cost-to-income ratio across the industry as financial institutions are incurring more costs than they did before. But where do all these costs come from?

Well, after the implementation of regulations, operating and compliance costs have skyrocketed. Mainly due to the competitive pressure from peers.

Additionally, investors are demanding for more. More customization, complex products, and different reports, all these add to the cost in servicing assets. Based on a study of firms in North America, Europe, and Asia-Pacific, the average cost of managing each dollar of AUM has increased by 4% since 2014. The cost of salaries also rose by 5% and non-compensation costs (regulatory expenses, technology, and office space) now account forof a firm’s budget compared to just 26% in 2014.

Ultimately, this will definitely impact the revenue margin and it did. It has been decreasing since 2014 and is continuing on a downward trend.

Source: Bloomberg

Slow Growth

The stringent regulations have definitely played its part in slowing the growth of the financial industry. Now coupled with the Covid-19 pandemic, the growth does not seem so rosy anymore.

PwC forecasted AUM to grow from US$84.9 trillion in 2016 to US$145 trillion by 2025– a growth rate of approximately 6%. Unfortunately, in 2020, Covid-19 sent the world into a downward spiral, and with it the financial industry. Hence, forcing a downward revision of the earlier predictions to within the 1% – 3% range instead.

What Can Firms Do?

It is hard enough to thrive in a competitive environment and now with even more uncertainty, the tough just got tougher. However, this is no time to lose hope. According to McKinsey, firms can overcome the pandemic and the ever-changing environment through three horizons.

Horizon 1 – Short Term

Business continuity is the first priority.

  • Taking clear and well-communicated steps to protect the health and well-being of all stakeholders
  • Educate investors on holding on through these volatile times
  • Be transparent with clients through frequent communications, as this will strengthen the relationship between firms and clients
  • And more importantly, ensure that the firm’s infrastructure is able to offer omnichannel communications- consistent and on-brand communications across multiple customer touchpoints (variety of offline and online channels)

Horizon 2 – Medium Term 

The market is slowly stabilizing so:

  • Focus on upgrading digital and analytics infrastructure across the value chain
  • Upskill employees to ensure they are prepared for the increasing reliance on digital engagement platforms
  • Develop new approaches to meet client’s needs such as through digital advisory platforms

Horizon 3 – Long Term 

Both incumbents and newcomers must reinvent the wealth management scene through:

  • Striking a balance between physical and online channels
  • Shifting from a product-centric approach to client-centric advisory methods

No matter the horizon or the cause of the volatility, firms need to remain agile and transparent. Financial institutions that manage to navigate through the turbulence will emerge above others- transformed and well-positioned for the new challenges ahead.

It has only become more evident the importance of digital platforms as part of a firm’s offerings. Let us help you make that move towards digitalization.

At Bambu, we specialize in developing Robo-advisory solutions for the financial services industry, from smaller RIAs and wealth advisors to some of the largest banks in the world. We help our clients work through the above key considerations to implement solutions that truly benefit their wealth management business.

To find out more, check out our product here or contact us at sales@bambu.co for more information.

The Era of Technology 

This is an era marked by technological advancements.

From smartphones to driverless cars, technology has opened the doors to endless possibilities. But of course, it also has its fair share of challenges – namely Automation vs Human.

Automation – an idea that is feared by the mass population.

There is an ongoing perception that with the development of robotics and artificial intelligence, it will replace all human labour; driving people into unemployment.

Pew Research Center conducted a survey in 10 countries, both emerging and advanced economies, and the research found that it is a widely shared view. Amongst the 10 countries, the outlook that automation is likely to transform our workplace has already begun.

Source: Pew Research Center

Looking at the results, it does not matter whether it is an emerging or advanced economy, more than half the respondents fear of getting displaced.

This view is most prominent in countries such as Greece, South Africa and Argentina – 52%, 45% and 40% respectively. Workers in these countries strongly believe that they will definitely get displaced as a result of automation sooner, if not later.

Even more are convinced that automation will bring about more pitfalls than opportunities to workers.

Some examples being:

  • Ordinary people will have a hard time finding jobs
  • Expansion of the inequality gap between the rich and poor
  • Very few better-paying jobs created

However, in this technology-driven world, the move to automation is inevitable, with capitalism as the main driver of this transformation.

Fast-forward to 2030

As of 2020, 50% of work that people are being paid to perform can theoretically be automated with the currently available technologies.

Based on McKinsey’s research into the impact of automation, 30% of the global work hours can be automated by 2030 depending on the adoption rates.

Even so, these are just predictions. There are many factors that come into play in deciding whether to automate or not. It also varies greatly on the country and sector as some are more susceptible to being displaced than others.

It would be a lie to say that people will not get oust at all.

By 2030, it is estimated that 400 million to 800 million people could be replaced by robots. Of the total number of individuals supplanted, 75 million to 375 million need to learn new skills and switch occupational categories.

On the bright side, though the threat of automation is real, it will eliminate very few occupations. It is more of a case of transforming the nature of work depending on the nature of the role.

Technical Feasibility

Technical feasibility, also known as the percentage of time spent on activities that can be automated by adapting currently available technology.

Source: McKinsey

Now if we look at the graph above, we can see that not all occupations are susceptible to being affected by automation.

It all boils down to the scope of work. Even if tasks are being automated, it doesn’t necessarily mean that the demand for that occupation will decline. Instead workers will just need to learn new skills and/or perform new tasks that can’t be automated.

There are a number of examples of the integrating automation into tasks but the overall demand for that occupation continued to grow.

One example will be the barcode scanner in supermarkets and retail stores. First introduced in the 1980s, it reduced labour costs per store by approximately 4.5%. Nevertheless, employment at supermarkets still grew at a constant rate of more than 2% between 1980 – 2013.

Why? Because cashiers were still needed. Scanners were just an additional tool to improve efficiency which translated into more sales.

What Kind of Work is Most Susceptible to be Automated?

The nature of work that is most and least susceptible to automation can be divided into two categories: works in predictable environments and works in unpredictable environments.

Works in Predictable Environments Works in Unpredictable Environments
Involves little to no complex skills Involves complex and high value skills
Technical feasibility: 78% Technical feasibility: 25%
Automation susceptibility: High Automation susceptibility: Low
Examples: manufacturing, data collection and processing etc. Example: people management, child care, plumbers etc.

Generally, workers in predictable environments are more susceptible to automation leading to a larger displacement of workers.

59% of all manufacturing activities have technical potential for automation. Automation has evolved beyond just manufacturing activities. Activities like processing payrolls, calculating material-resource, administering procurement and using bar codes have already been automated.

Through machine learning and artificial intelligence, technologies now possess capabilities to transform sectors such as healthcare and finance.

Yes, though financial services rely on professional expertise and a substantial amount of knowledge. However, 50 percent of overall work hours are also spent on repetitive tasks such as collecting and processing of data. Thus, this set of activities can potentially be automated so that financial advisors can focus on higher value skills.

Shift in Skills Demand

With the acceleration of automation, the demand for workforce skills will shift in correlation. McKinsey launched a study projecting the demand of these skills by 2030.

The skills were split into five categories:

  1. Physical and Manual Skills
  2. Basic Cognitive Skills
  3. Higher Cognitive Skills
  4. Social and Emotional Skills
  5. Technological Skills
Source: McKinsey

The top three that will be in high demand are:

  • Higher cognitive skills
  • Social and emotional skills
  • Technological skills.

Despite being the smallest category today, technological skills are expected to grow by 55% by 2030 and will make up 17% of the working hours. Demand for social and emotional skills such as managing people and leadership will rise by 24% and make up 22% of working hours. Lastly, the demand for higher cognitive skills will grow moderately at 8% over the next 10 years.

On the contrary we’ll observe a decline in basic cognitive skills and physical and manual skills. These are considered lower value tasks that are repetitive and can easily be automated. Even so, they will remain the largest category of workforce skills as the rate of adoption varies between countries and sectors.

Shift in skills is nothing new, the skills requirement have constantly changed ever since the first industrial revolution. As technologies transform the nature of work across industries, job scopes will change accordingly. It opens up doors to a vast array of opportunities for people to explore.

“This journey of transformation can also be a journey of growth for our businesses and people alike” – Mrs. Josephine Teo (Singapore’s Minister of Manpower)

Zoom into the Financial Sector

The financial service industry is one where transformation brings about many opportunities. Many industry players have invested enormous amounts into new technologies. As a result, it enhances their competitiveness and operating capabilities.

Financial advisors are still spending a majority of their time on collecting and processing of data. These low value tasks can easily be automated with the help of AI and technology. With this, financial advisors can shift their focus to higher value work and ensure the delivery of highest quality service.

Some firms have already made the move to transformation, resulting in a shift in demand for workforce skills specific to the financial sector.  As of 2018, the 5 most in-demand skills in the fintech industry are:

  1. Blockchain & Distributed Ledger Experts
  2. Programming Skills
  3. Machine Learning, Artificial Intelligence & Deep Learning
  4. Cybersecurity Expertise
  5. Soft Skills

Now if categorize based on the general five workforce skills it would come under:

1. Blockchain & Distributed Ledger Experts Technological Skills
2. Programming Skills Technological Skills
3. Machine Learning, Artificial Intelligence & Deep Learning Technological Skills
4. Cybersecurity Expertise Higher Cognitive Skills
5. Soft Skills Social and Emotional Skills

As expected, the demand correlates with McKinsey’s predictions. 3 out of 5 of the most in-demand skills are technology oriented with the other two requiring higher cognitive and social and emotional skills.

This just shows that the demand for lower value skills is becoming obsolete. Although some may perceive this as warning lights, others see it as an opportunity. An opportunity to automate low value tasks and focus on higher value activities.

Digital Transformation: Now or Never?

It does not have to be an either or situation, automation and humans can work together in harmony to deliver the best of both worlds solution.

Consider implementing a wealth tech solution that will enable your financial advisors to be more efficient. From Robotic Process Automation (RPA) to streamline your operational processes to Robo-advisors that will enable better financial advisory for your clients, the time for digitalization is now.

Leveraging technology to allow your advisors to focus on higher value tasks will lead to an improvement in their skill sets, further setting your organization and staff up for long-term success.

Don’t know where to start? Well look no further, Bambu has just the solution for you.

At Bambu, we specialize in developing Robo-advisory solutions for the financial services industry, from smaller RIAs and wealth advisors to some of the largest banks in the world. We help our clients work through the above key considerations to implement solutions that truly benefit their wealth management business.

To find out more, check out our product here or contact us at sales@bambu.co for more information.

The Financial Advisory Market

Registered Investment Advisors (RIAs) are not in danger of extinction. Period.

As a matter of fact, they are growing bigger than ever. 2019 was the year RIAs hit a record high of 12,993 firms, serving 43 million clients and $83.7 trillion of assets under management. With the number of RIAs consistently growing each year, it now stands on a cusp of its next growth phase as global income levels rise.

During the ‘80s and ’90s, baby boomers helped fuel the nascent development of the advisory industry. Hardworking and excellent collaborators, they are a generation that uses technologies as productivity tools rather than connectivity.  However as this generation nears retirement, RIAs now seek a new generation of clients.

Who are they?

Millennials. The generation that grew into the digital age. They are a generation that lives and breathes technology – it is their connectivity to the world.

But who are they really? According to Pew Research Center, millennials are anyone born between 1981 and 1996.

Current Demographic of Millennials

Millennials make up ¼ of the US population in 2020, the second-largest generational cohort in the US.

 

Source: Knoema

Now if we look at other parts of the world, millennials still make up a large bulk of the population

  • Asia 36.6% of the population are millennials
  • Africa 29.2% of the population are millennials
  • Latin America 36.2% of the population are millennials
  • Europe 34.1% of the population are millennials
  • North America 33% of the population are millennials
  • Oceania 33.6% of the population are millennials
Source: Statista

What can we gather from these statistics?

It is evident that millennials are one of the largest generations in the world. In more developed regions, we can see that the percentage of baby boomers may be slightly higher, all due to aging populations in those areas. Whereas, in developing regions, the Gen Zs are not far behind and will soon overtake all previous generations.

Financial Habits 

This group of individuals are the drivers of the future. As they come of age, enter into the workforce and mature financially, this is the group that advisors do not want to miss out on.

Often labeled as materialistic and spoiled, but the truth is they’re more than what society perceives them to be. Millennials’ generational attitudes differ greatly from generations of yore, especially the baby boomers.

There are many things that we don’t know about this generation, but one thing we know for sure is that they are anxious.

Millennials are constantly worrying about their financial future asking questions like:

  • Will I meet my financial goals?
  • Will I be able to buy a house in the future?
  • Will I pay off my student loans?
  • Will I be able to save for retirements?

As a result, millennials became experts at saving money. According to research conducted by the Bank of America, 73% of millennials are saving in 2020- 15% increase from 2018. 24% of those have $100,000 or more in their savings.

Source: Bank of America

These habits emerged in the aftermath of the great recession, where 15% of millennials were left unemployed, and many are still struggling. For those who managed to land a job, it hasn’t been easy either being thrown into a tough job market with wage stagnation.

Hence, despite saving early and saving well, millennials are behind in wealth accumulation:

  • Average net worth of American millennials is less than $8,000
  • Average net worth of Americans aged 18 – 35 has decreased by 34% since 1996
  • Millennials earn 20% less than baby boomers

The outcome?

Student loans are piling up and living costs are outweighing the wages, making it near impossible to save.

For younger millennials who watched the great recession unfold and the struggles of their seniors, they developed better saving habits. They became more practical in terms of having rainy day funds for their future.

From the same survey, the results showed just exactly that – 75% of respondents are saving for retirement and 51% are saving for emergency funds.

Source: Bank of America

Not only did they start saving early for retirement than previous generations- at the age of 24- millennials hold their future as the utmost priority with:

  • 67% are utilizing employer sponsored retirement plans
  • 52% would rather work harder today and retire early, instead of working longer and having more free time now
  • 48% put money into savings each month
  • 28% who have savings are investing in the market

Millennials are not what they’re usually stereotyped as. They’re more forward-looking and are willing to forego short-term pleasures for long-term rewards.

What are the Implications for RIAs?

Traditionally, RIAs require a minimum AUM ranging from US$250,000 to US$1,000,000. However, this filters out a large portion of the market, specifically the millennials.

Millennials have the heart and burning desire to start their investment journey, but that’s not enough. Limited by their asset size, they’re unable to overcome the traditional barrier of entry. Ironically, this same barrier prevents RIAs from engaging with them too.

Even if they are able to, it’ll be much later in the millennial’s financial journey, which may be too late by then.

With the help of Robo-advisory solutions, RIAs no longer have to be handicapped.

The low initial investment amount and the user-friendly digital interface structure allows any millennial to kick start their investment journey early on. Coupled with being digital natives, the provision of such services will enable millennials to connect with RIAs easily.

In this new digital era, this represents a win-win situation for both clients and RIAs.

Future of Financial Advisory

Where is the future of Financial Advisory headed? What happens when baby boomers’ kids who want nothing to do with their parents’ financial advisor inherit their wealth? Why pay an advisor a fee when you can easily build a personalized investment portfolio online for a fraction of the cost via Robo-advisors?

These are just some of the worries that are plaguing the financial advisory industry.

Automation has always been seen as a threat to the job security of advisors, but that may not be the case afterall. The demand for personal financial advisory is growing and will continue to grow stronger as income levels and savings rates rise; increasing the demand for financial assets at the same time.

With recent news of the US personal savings rate hitting its highest level in 39 years, the wealth management industry is poised for skyrocket growth.

Financial Advisor’s Ally 

According to a survey conducted by Capgemini, financial advisors spend 67% of their time engaging with clients. While 29% of their time is used to perform administrative tasks. Leaving only 4% to perform productive tasks such as monitoring and rebalancing client’s portfolios.

Source: Capgemini

However, all these mundane and repetitive tasks can go away with the help of a Robo-advisor. Automation can help wealth management firms:

  1. Increase advisor’s productivity
  2. Improve operational efficiency
  3. Improve advisor-client relationship
  4. Increase market share and improve reach
  5. Assist in the delivery of simple and complex financial services

Shift in Consumer’s Expectations 

Now that financial advisors are relieved of the repetitive mundane tasks, they can focus more on enhancing client experiences. A research by Salesforce found that 84% of respondents expect very highly of customer experience, to the extent that it holds the same importance as the products or services.

 

Source: Salesforce

Just as how technology has evolved, client’s expectations have done so as well. It is no longer enough to just deliver an extraordinary product, customer’s experience is just as important. Therefore, the integration of automation in financial services will enable financial advisors to deliver the finest customer experience while retaining high productivity.

Digital Consumers 

Even though technological advancements have been going on for years, companies are still having trouble keeping up with the digital change – including wealth management firms. Unfortunately for the firms, these changes are inevitable and will not stop, especially with digital consumers as the driving force behind it all.

In 2019, Ernst & Young surveyed 2,000 investors across 26 countries on various topics surrounding the wealth management scene. This is what they found.

Source: Ernst & Young 2019 Global Wealth Management Report

So what does this tell us about consumers’ behaviour? First of all consumer’s behaviour is definitely evolving and it’s evolving fast.

In 2016, 18% of clients used mobile applications as their primary channel with a projected 6% increase by 2018. And once again, as consumers, we underestimated the rate of change. The actual percentage of clients who use mobile applications doubled from the amount in 2016. Coupled with those who prefer website access, ⅔ of clients prefer digital platforms as their primary channel.

Smart phones have only become smarter. Everything can be done at the touch of a button, from grocery shopping to finding jobs. The convenience and efficiency are the main drivers behind increasing preference from clients.

As clients drift towards mobile, first-generation channels such as websites are becoming obsolete. Projected to stay constant at 38%, the actual numbers would beg to differ. In less than three years, the preference of websites as a primary channel dropped by a third.

These numbers are the average across all wealth management activities. Hence, will the number differ when we dive into the specific activities?

The answer is no.

Source: Ernst & Young 2019 Global Wealth Management Report

The gap is even wider. Although a large portion of the clients use mobile applications for basic tasks, there has been an increasing popularity in using apps for advanced activities as well- such as portfolio management, and advice-related tasks.

These percentages are expected to increase over the coming years with advancement in wealth management tech and ease of use for clients of all ages.

Another compelling observation found that in correlation with the complexity of tasks, client’s preference for digital assistant or chatbot increases as well.

A survey conducted in 2018 found that only 1.4% of respondents are currently using digital assistants. However, it is projected to increase eight times the amount in the future. The demand for digital assistants is not restricted to only simple tasks. Clients are actually more inclined to use digital assistants for complex tasks such as advice-related activities.

High Touch Engagement

Nonetheless, the need for traditional advisors is still prevalent. High touch engagement is even more important during volatile time and major life milestones. Looking at the results from the survey below, we can see that for all major life stages, more than half of the clients are looking to use advisory services.

Why is this so?

As human beings, we fear uncertainty and major life changes are full of it. When faced with such changes, clients search for trustworthy advisors to help them navigate through the murky waters of life. However, the demand of human interaction can vary depending on types of clients. Clients with more complex financial strategies or situations request for more human interaction.

To many people’s surprise, the demand for face-to-face meetings actually decreases with wealth. The rate of mass affluent demand for such services is nearly double the rate of the ultra high net worth clients- 11.7% and 6.5% respectively. This counters the general perception that automated services are for the mass affluent.

Source: Ernst & Young 2019 Global Wealth Management Report

What’s Next?

Integrating automation does not mean eliminating human advisors completely. Yes, consumers are shifting more towards digital as a primary channel. However, there are some clients who require the help of a traditional financial advisor.

It is said that the absence of emotions is one of Robo-advisor’s biggest strengths. But in times of uncertainty, clients need someone who can empathize with them and reassure them by providing that human touch.

So what does this mean for firms? Do they move to digital or remain the same?

Well, both. It is all about balancing high tech and high touch services. Through harnessing state of the art technology, firms can improve productivity and automate the repetitive tasks. As a result, advisors can focus on delivering high quality engagement to clients who desire the human touch.

According to a Deloitte survey, 66% of consumers seek a self-directed journey. Providing the omnichannel delivery will enable consumers to lead their own journey and choose how they want to interact with the wealth management firms.

Those who prefer little to no human interaction can opt for the full digital experience. Whereas, clients who seek to consult a financial advisor still have the option to do so; providing the best of both world experience for the modern clients.

This is truly the financial advisor of the future.

The Robo-advisor industry grew out of the market collapse in 2008-2009. With Wealthfront and Betterment leading the way, over US$4 trillion has since been invested in ETFs – the main underlying asset of Robo-advisors – as of September 2019; a 190% increase from 2015.

Designed to provide an experience that enables trust and empowerment, the Robo advisor curates portfolios that appeals to investors of all ages. Using algorithms to automate portfolio allocation, investors were able to access diverse asset classes and market sectors tailored according to their financial goals.

In a report by Charles Schwab, the number of users using robo-advisory services is expected to grow from an estimated 2 million in 2018 to 17 million by 2025. However, this is just the tip of the iceberg.

Customer-centric Wealth Management

Boston Consulting Group’s report highlighted how retail banks traditionally focused on a product-first sales approach, rather than letting the specific needs of individuals dictate their commercial offerings and outreach. This has since created a gap where the mass affluent (AuM <$1M) segment has been neglected and underserved (Figure 1). This presents a potential for revenues and the number of clients to grow as robo-advisors step in to fill this gap.

Figure 1 (Source: Boston Consulting Group, 2019)

“Winners in the wealth management arena will accelerate product innovation and develop offerings that address the specific needs and preferences of affluent subsegments,” – Boston Consulting Group

It is no surprise then that over the years, a number of big players have jumped onto the Robo-advisor party by launching digital advisory services through in-house offerings, acquisitions and partnerships.

The Financial Giants

Charles Schwab

Schwab Intelligent Portfolio, introduced in 2015, was Charles Schwab’s very own Robo advisor.

The Schwab Intelligent Portfolio is a pure Robo-advisory service. 53 ETFs for investors to choose from- each one hand-picked by the experts at Charles Scwab. Just like any Robo-advisor, the platform will monitor and periodically rebalance the portfolios. If situations deem to be risky, then the Robo-advisor has the power to halt the trade.

Additionally, Charles Schwab introduced Intelligent Portfolio Premium, a hybrid Robo-advisor model. Complimentary with the above-mentioned services, Intelligent Portfolio Premium offers free consultation with their experts for guidance and planning. It acts more as an add-on to the existing Schwab’s Intelligent Portfolio with a monthly subscription fee.

BlackRock 

BlackRock, a global wealth management corporation, acquired FutureAdvisor in 2015. Unlike other players in the industry, BlackRock did not plan to target individual investors.

Instead, the company aims to enable other banks, brokerage firms, and insurers to use their platform to serve clients. It hopes to position FutureAdvisor as a Robo-advisor solution for advisors.

With FutureAdvisor, financial institutions have the option to either offer a pure advisory service or a hybrid Robo-advisor model, whichever fits best. BlackRock is giving smaller wealth managers and RIA a solution to stay afloat in the competitive marketplace- giving them access to the same technology that big players are offering to clients.

“Everyone talks about how robo-advisors can’t connect with clients, I actually believe that those kinds of tools are like ATM machines. We are all going to have to have it” – Larry Fink (BlackRock’s CEO)

Vanguard 

Within that same year- 2015 – Vanguard also joined the Robo-advisory scene. The company launched ‘Personal Advisor’, a hybrid Robo-advisory service, prides itself on ‘lower than industry’ service fees.

Consultation with a financial advisor is readily available to clients on an ongoing basis. Even from the very first touchpoint. In comparison to other Robo-advisory services, a financial advisor will facilitate the onboarding process of clients and assist in the development of their financial plan. It doesn’t stop there. Together with the Robo-advisor, the financial advisor will monitor the client’s portfolio and rebalance if necessary.

Seeing the success of their hybrid Robo-advisor service, in 2017 Vanguard rolled out another one- The Digital Advisor. For clients who prefer to make their own investment decisions, this one’s for you. Digital Advisor is a pure Robo-advisory service at your fingertips- no human intervention- just you and the technology.

Capital One

Advisors Managed Portfolio, a “digital portfolio with a human touch”, was one of the later editions to the Robo-advisory industry. The service offers client access to a financial advisor throughout the investing process, meanwhile, the Robo-advisor will take the baton and bring your portfolio to the finish line.

Just 3 years later, Capital One Acquired United Income. A pure Robo-advisory service specializing in retirement plans. Nearing retirement or already in retirement? Then this service is the one for you. The service will assist investors in finding the best ways to manage their wealth. All this at the comfort of your home.

Bank of America-Merrill Lynch 

Merrill Guided Investing is a hybrid Robo-advisory service offered by Bank of America-Merrill Lynch. First introduced in 2017 and later modified in 2019. Like any other hybrid Robo-advisor model, clients get to experience the best of both worlds- the combined power of technology and expertise from the financial advisors.

With Merrill Guided Investing, clients will receive guidance from the chief investment office (CIO) of Bank of America-Merrill Lynch. The CIO will monitor the client’s portfolio to ensure that they stay on course even during the most volatile time. Markets are assessed on a regular basis using a disciplined approach and adjust strategies accordingly.

“In that whole continuum, there was one piece our clients pointed to that was missing: The mass affluent client who enjoys technology, who leverages digital, but who wanted some guidance and advice in terms of holistic financial planning. This allows clients to leverage that platform but still access a financial advisor.”– Aron Levine (Bank of America-Merrill Lynch’s Head of Consumer Banking and Investment)

Wells Fargo 

The Intuitive Investor Program, a Wells Fargo Advisors offering for consumers who prefer to manage their finances themselves. A combination of algorithm-driven technology and financial expertise.

Wells Fargo Investment Institute has built nine portfolios for the Intuitive Advisor Program- each seeking to provide an optimal return at every risk level. Based on the client’s profile, the Robo-advisor will invest in one of the nine portfolios. Missing the human touch? Rest assured, Wells Fargo’s team of financial advisors is available through the phone to assist clients with any inquiries. Truly a Robo-advisor experience with a human touch.

Morgan Stanley 

Morgan Stanley was one of the later corporations to join the Robo-advisory industry as compared to its competitors. Launched at the end of 2017, Access Investing added their own twist to the typical Robo-advisory framework.

The Robo-advisors perform their function as per normal, but here is where the twist comes in. Morgan Stanley has created a set of themes and portfolios for investors to choose from. Investors get to pick and choose the theme or portfolio that best suits their interests. Some themes or portfolios are but not limited to climate action, defense and cybersecurity, data and AI, gender diversity, and emerging consumer. With this you can invest in what you love.

JPMorgan

JP Morgan Chase is one of the largest banks in America, known for serving the ultra-high net worth clients. However, in 2018 the company decided to launch “You Invest” a Robo-advisory service for the mass affluent.

You Invest positions itself as a people-centric investment platform. Just as the name may have suggested. Everything is about you and you make all the choices. To fully support this stance, the company has decided to offer it as a pure Robo-advisory service with little to no human intervention.

So What’s Next?

Over the last 12 years, the Robo-advisory industry has grown significantly.

However, with 80% of mass affluent Americans lacking a financial advisor – holding approximately US$7 trillion of wealth – the race is on for wealth managers.

The importance of digital transformation has never been more critical.  – it has gone from ‘we’ll go digital someday’ to ‘we have to go digital today’.
Robo-advisors have since evened out the playing field. Solutions like Bambu Build, a fully customizable wealth tech platform, allow anyone now to have a seat at the table with these big players.

The Rainbow After The Storm

From the ashes of the 2008 financial crisis, came Robo-advisors pioneered by Betterment and Wealthfront. The future seemed promising. For instance, in 2016, KPMG projected Robo-advisor’s assets under management (AUM) to reach US$2.2 trillion by 2020. On the other hand, Deloitte projected it to reach US$16 trillion by 2025. Some have also argued that the projections are too optimistic – predicting instead that AUM will be less than US$1 trillion AUM as of 2019. Nonetheless, Robo-advisors are on the cusp of a revolution in wealth management.

As with any new product market adoption, there’s always a gestation period. This begs the question – when will exponential growth kick in? Our answer is that era is now – with a new wave of tech-savvy, digitally dependent investors, Robo-advisors are set to grow in numbers and scale.

Upcoming Digital Investors

Born into the digital age, Millennials and Gen Z make up 63.5% of the world’s population as of 2019. As a generation that grew up with smartphones and social media, they possess an inseparable relationship with all things digital. Their tech-savvy nature and comfort with (and trust in) technology make Robo-investing a natural and preferred choice.

Source: Deloitte

A study on affluent millennials investing behavior showed the stark difference in the adoption rate of Robo-advisors across the generations. Firstly, Millennials and Gen Z had a significantly higher adoption rate than the Baby Boomers.

Source: Spectrum Group

Secondly, within different groups of investors – the same pattern was observed.

  • Amongst UHNW investors, 56% of the Millennial and Gen X respondents use Robo-advisors, compared to only 13% of Baby Boomers.
  • Among Millionaires, the gap is much wider, with 62% of Millennials, 24% of Gen X, versus a low of 10% Baby Boomers using Robo-advisors.

Therefore, proving how Robo-investing is the preferred and go-to option for young, tech-savvy investors.

The Untapped Investors

A Snapshot of Investor Households in America report by Finra showcased demographic information of the uninvested. It found that more than 50% of households earned an income of more than US$50,000, but had no investment accounts at all. This is stark considering the assumption that people will start investing when they have “enough”. Why is this so?

In 2018, according to a Gallup Economy and Personal Finance Poll, the lack of knowledge and prohibitive management fees were two key reasons why many are deterred from the stock market. According to the same poll, only 37% of adults aged 35 and below owned any stocks. Conversely, the poll reminded us that a huge potential addressable audience of 63% of the population exists and is waiting for wealth managers to engage.

However, with Robo-advisors, this will no longer be the case. The lower barriers of entry and automation of portfolio management have democratized the investment arena for all. With easier access to investment opportunities, everyone is now able to participate in the game of wealth via institutional bonds, emerging market equities, and even exotic rare minerals ETFs.

Source: US Securities and Exchange Commission

New Wave of Emerging Investors

With these new waves of investors reaching financial adolescence, Robo-advisor offers them an easy path onto their investment journey. Experts predict that the industry is poised to reach US$1.4 trillion in assets this year. This equates to a 47% growth in AUM and 70.5 million new users.

With the proliferation of Robo-advisors (especially in the US), Robo-advisors have become popular around the globe. In 2020, UK is forecast to hit US$24 billion market value. Meanwhile, in Singapore and Hong Kong, strong growth figures (AUM increasing by 400%) over the past five years have been witnessed.

Source: Deloitte

The low-cost advantage of Robo-advisors has allowed wealth management services to expand beyond traditional clients. Advisors are now able to engage younger, tech-savvy clients with a click of a button.

Adding further fuel to the growth of Robos, a survey found that over 50% of investors prefer making their investment decisions in the absence of a financial advisor.

Source: Deloitte

Digital Wealth in 2023

According to Statista, the Robo-advisory industry will reach US$2.55 trillion with 147 million users by 2023 – 11 times the number in 2017. These figures are on the conservative side, as it only reflects active users of Robo-advisors and excludes wealth managers who manage their clients’ portfolios.

With the new generation of digital-native investors, the move to digitalization is inevitable. Robo-advisors have gone from a nice to have to a must-have for financial institutions worldwide.

With Bambu GO, a ready-to-go Robo-advisor solution, anyone can now have a seat at the wealth tech table.

At Bambu, we deploy white-labeled Robo-advisors that enable financial institutions at scale. With our smart portfolios algorithms and machine learning capabilities, your users can achieve their financial goals through a user-centric wealth journey with you. Schedule a demo to find out more.

This post is a synthesis of my predictions for the next millennium, in the form of a third-person narrative of a person born today. The broad themes covered: Fintech, Robo-advisors, Blockchain and Crypto, Automation, Universal Basic Income, Human Longevity, Overpopulation, Virtual Reality, Space Exploration, Space Colonization, Asteroid Mining, Artificial Intelligence, Superintelligence, Consciousness, The Singularity, Particle Physics, and a few others.

Why? What’s the use of thinking of the distant future? Because a lot of the above are already on the table. Forecasting exact timelines is impossible, but we could see major breakthroughs in any of these within the next few decades. That’s within our lifetimes or even our careers. The exponentially accelerating nature of technology means we can’t assume to live our lives as our parents and grandparents did.

This is the life of Brian. Not that Brian, but a Brian nonetheless. Brian was born on January 23rd, 2020. He was born into Middle America, in the middle of nowhere in particular. His early years were a study in the average, with nothing to separate this Brian from the countless Brians before him.

Raindrops

Brian’s entry into the wondrous world of wealth came at a young age, as his parents decided to give Brian the greatest gift of all, the gift of wealth. Something called a Robo. A robot, Brian asked with eyes gleaming with excitement. No Brian. A Robo. It’s a financial app for kids. Brian’s heart sunk in despair.

While most kids his age all got the same gifts from the same toy stores, Brian got money. Not a lot, at first. While other kids received coins for their chores to spend on candy, Brian got his digitally. He couldn’t spend it, in fact, he could only see it in an app. The little acorn on the screen had slowly grown roots, as birthdays and chores gathered a few dollars at a time like little raindrops on his acorn. His parents were pretty weird about it, and when he blew the candles on his cake every year, he would get dozens of notifications about new raindrops. It made him blush with embarrassment. What good is money if you can’t use it?

He didn’t really talk about it to his friends much, as they found it weird he never got actual presents and never had any candy to share. So Brian kept his acorn to himself. The one thing that stuck in his mind was a little cartoon Albert Einstein telling him about the magic of compound interest, that it was the 8th wonder of the world. Each time a little raindrop of cash fell onto his acorn, it would grow its roots a little faster. Watching it happen was like watching paint dry, but every now and then, he would notice a new branch rooting out in the virtual soil. Brian would’ve settled for some candy, but it wasn’t really his decision. At least he had an acorn. Well, a digital one.

Safe to spend

By the time Brian’s 18th birthday came around, it was time to head to college like all his friends. By now his little digital acorn had grown into a sapling. He was surprised to find that it wasn’t actually a tree sapling, but a bamboo shoot. He found on Wikipedia, that this was an obscure reference to the original Singaporean company that designed the software. It mentioned that one of the founders now lived on Mars, and the other lost all his fortune in a single hand of poker. He wondered if all that was true, but didn’t care enough to Google it.

Somehow, he had accumulated $6,700 to his name. You could buy a lot of candy with that! Or beer! He was actually embarrassed about it because even though his friends were from rich families, they didn’t have any of their own money yet. Brian wasn’t actually allowed to spend any of it, mind you. The app wouldn’t allow it. He spent hours googling for hacks, so he could buy beer, but it was idiot-proof if nothing else.

There was a debit card attached to the app, but you couldn’t spend your actual wealth. There was a different tab for earnings, like from salary. Most frustratingly you weren’t even allowed to spend that, just half of it! The rest went into your wealth and got invested automatically. It drove Brian insane. He was poor, and had to work odd jobs on weekends, only to get half of that measly amount to spend on beer. Let’s just say he never got very drunk. At least he could get a new pair of jeans every year. Second hand.

With his penny pinching, the one big splurge during his college years was a road trip across America. The Robo app allowed Brian to invite his friends into a shared goal and pitch in a set amount each week, of their measly odd-job salaries, towards the $1,000 they needed in gas and beer money. It was epic. Totes worth another six months of cleaning cafeterias.

Basic Income

Ahh yes, now Brian enters his golden years of high earning on Wall Street? Wrong. By the late thirties, most banking jobs had been eliminated. Actually, most jobs overall had gone. Andrew Yang enacted a radical policy during his presidency, two decades after his first campaign ended in ridicule. The jobs had really gone as he predicted. Poverty and crime were on the rise everywhere, as technology took over a lot of white-collar jobs and entire industries like transportation were obsolete. You weren’t allowed to drive cars anymore, it was illegal. Brian was glad they got that one road trip before it was too late.

As a recent college graduate without a job, Brian was qualified for the new Universal Basic Income. He got $1,000 each month into his Robo app directly, without lifting a finger. At least he was allowed to spend all of his earned income by now. It wasn’t much, that’s for sure. After rent into his rat hole of an apartment, and some rice and beans he had $200 left for luxuries like the laundromat. At least he didn’t have to pay back his student loan after President Yang canceled all student debt in 2042.

With increases in corporate and property taxes, healthcare was now free. So really, Brian got to keep his money for himself, well the little he had. Actually, by now his little bamboo stalk quoted $57,203 to his name. Not nothing, then! Just locked away. Since ironically, he couldn’t spend any of his supposed wealth, all he could do in the app was save for a rainy day, or nothing at all. A cash fund that he would be allowed to use on certain expense categories like groceries. He learned the hard way that alcohol and tobacco items in the expenses would be blocked.

Brian didn’t really have any passion or direction in his life at this time. The only way to access his wealth would have been to start his own business by submitting a business plan to be reviewed by his parents, but he didn’t have any ideas. So like many of his friends, he applied for nursing school. Caretakers for the elderly were in hot demand, seeing as people refused to die like they used to. Brian heard the king of England used to send cards to people on their 100th birthday, but the tradition stopped after it started taking more than an hour each day.

The trick was that since there were more people than jobs, you had to actually qualify for schools and jobs these days. It wasn’t about money, even. It was super dumb. You had to gather “Ethics Points” into your Robo app. Smart people talk for goodie-goodie points. It wasn’t even fun like the acorn. Every time you did something for the public good, you got points. You couldn’t spend them in any way, but to qualify for a job you had to get 10,000. That took years of picking up trash on the streets and volunteering in soup kitchens and such.

Some of his friends had just given up, satisfied to live away their measly existence on UBI. At least the “Vinternet” was free. It was what replaced the regular boring Internet. All you needed were government-issued contact lenses, that you could switch on with a gesture. That would transport you into a virtual existence where you could actually do stuff. You could travel. You could do nostalgic jobs like surgery or accounting. You could even get drunk, virtually. A lot of his friends lived for that. Somehow, even though Brian couldn’t explain it, he wanted something real. He wanted to still continue his human story as a human, not as a video game. So he got his EP score up to 10,000 and shipped off to nursing school.

Peak Accumulation

After a few years of more school, Brian was on the nursing circuit. Mostly that meant scooting around town visiting old folks in their homes. Luckily, the heaving lifting like bathing and diapers were already done by robots. His job was half psychologist, half nurse. He measured things like blood pressure mostly for the physical interaction, as by now all that data flowed in real-time to the PGAI. That was short for Pretty General Artificial Intelligence, but it was colloquially known as the Pig-eye. It wasn’t pretty, in fact, you couldn’t see it all as it was just virtual, and certainly not general in the military sense, just that it kind of knew what to do better than humans did. People said it wasn’t actually even one thing, it was just a collection of thousands of simple algorithms that performed at beyond level ability for individual tasks. So, Pig-eye gradually just took over most decisions in daily life, kind of like following GPS orders but for everything else like what to eat and when to sleep and exercise. If you needed medication it just arrived by little drone packets to your doorstep. You didn’t know what was in them, but since nobody got sick anymore, they just took them without much thought.

Since Brian was finally earning now, for the first time in his life he could live a little. The $10,000 he made sounded a lot, but inflation meant it wasn’t the same as his dad’s 10G’s, it was probably closer to $4,000 in his dad’s time. He could choose how much to shower his sizeable bamboo patch each month, anywhere from 20% to 50% of net income. He tried to make up for lost time and maxed out his spending at 80% of his income. Good times rolled.

With his Robo app, he would just swipe left if something interested him. That would automatically use his income to save and automatically order for him. He got into furniture. Vintage vinyl on a beat down player he restored in his free time. Which was a lot, since you could only work 3 days a week. The rest was enforced leisure time. He also enjoyed investing in stocks, which was a feature he had recently unlocked after he hit $200,000 in total wealth. He enjoyed reading about space exploration and the early habitats on Mars. He bought a few shares in every space company he could get his hands on, just to feel connected to the storyline.

A Ticket to Mars

After a few more years passed, Brian approached a mid-life crisis at 30. If he wanted to have children, he would have to accumulate 100,000 Ethics Points to qualify. There just wasn’t enough room for more people on Earth, and old folks refused to die anymore. 200 was now the new 100. Brian was way off, even though his nursing job contributed to his EP score. It wasn’t going to happen for him. He only had a few months to go until the big three-oh, and after that, you weren’t allowed to conceive a child due to the telomere stability of your genes, or something.

Over the past decade, Brian had watched his small investments into space exploration boost his bamboo patch into a pretty solid looking forest. You could even see little monkeys in there, each named after a company he had invested in. A few were larger apes already. It wasn’t so much that Brian was the explorer type. It was more so that Earth no longer seemed to have anything to offer him, expect to age away into futility. So he decided to save for a ticket to Mars.

The original estimate from Elon Musk had been the cost of an average home, but with inflation over decades that had crept up considerably. That, and the fact that early visitors had a high churn ratio after the initial romance died out, and many returned on the flights. You now had to cover two years of oxygen and food on top, for the next orbital alignment between Earth and Mars, and your ticket home. $750,000 was now the going price. It would have been cheaper to go to Jeff Bezos’ orbital colonies, but that didn’t have the same finality that Mars still carried.

Brian had boosted his savings rate up to 30% by now, more out of boredom than anything else. There just wasn’t that much space to put junk he would buy. His total wealth was now at $450,000. He could afford Mars by signing up for the SpaceX Savings Plan, whereby you put in an initial deposit and monthly savings that all counted as SpaceX revenue years before your trip took place. In exchange, SpaceX granted would-be space travelers one MarsCoin for each dollar saved. The recent rumors of extensive mineral deposits on Vallis Marineris had created a gold rush, with MarsCoin value skyrocketing like a Ponzi scheme. Brian got his ticket. He would leave Earth aboard a 10th generation Starship, never to set foot on the blue planet he was born on.

The Universal Decumulator

A few decades had passed. Now Brian has done well for himself in this life, much better than his first on Earth, a distant memory, and established himself in a new reality on another planet. The general lethargy and loss of free will he had grown up with on the Blue Planet was not to be found on the Red Planet. He found a small but growing population of hard workers, trying to push the limits of their experience beyond survival towards something civilized.

His hard work had built himself a minor fortune, by starting the first plumbing business on Mars. You scoff now, but it turns out that plumbing was one of the hardest jobs to replace with A.I. and robotics. Lawyers and doctors went silicon ages ago, but the combination of dexterity, physical, and detective work that goes into finding a leak remained untouchable and a highly prized profession well into the A.I. age.

He had also done well into the crypto markets, which had effectively replaced former stock and currency exchanges along with private equity. Everything was public now, and real-time around the clock as everyone now followed Solar Mean Time. Many of his friends had lost their fortunes in the great crypto crash of 2062 when quantum computing breakthroughs erased the underlying cryptographic principles of Bitcoin. The consequent dark decade was an economic disaster on Earth, but Brian decided to go into crypto once post-quantum cryptography was established, as few alternatives for investment existed besides tucking rare minerals under your bed. But that was super uncomfortable quickly. Anyway, commodities were also wiped out in value after asteroid mining really took off, and rare planetoid metals like gold were brought in by the ton each day.

Advances in longevity research yielded breakthroughs in the late 21st century, effectively promising unlimited lifespan, and more importantly healthspan, to anyone who could afford it. Brian was lucky to have built his wealth in time and took his annual viral vector injections to maintain his outward appearance at his original biological age of 60, with the internal cellular age of a prime 20-year-old male. He liked the sage dignity implied by a little salt & pepper around the temples.

This seeming miracle of science did present him with a new challenge. How can you afford to sustain a decent lifestyle in perpetuity, without having to work every day? In his youth, Brian wasn’t much of an intellectual, but his financial freedom had afforded him a few decades of careful study of philosophy. He now felt his greatest contribution to future generations would be to start his own Academy, modeled after the ancient greats of Greece, allowing youth to learn from his century of wisdom at no cost.

Brian floated his entire ownership of shares in his plumbing business in a matter of minutes on the crypto markets. He now had the historical equivalent of $23,900,239 dollars to his name. Actually, it was all in the local MarsCoin that had been finally stabilized after Elon forked it on a Twitter dare. A few times. Brian had a lot for now, but infinity is a long time, and inflation never stops. He also still had bills to pay. How long would it last? Brian’s cost of living including operating The Academy was not insignificant, and simple arithmetic showed he would only have 400 years before his wealth ran dry. That just wouldn’t do. He would barely have time to cover all historical works on Stoicism in 40 decades. He also wanted to learn the flute, and it sounded pretty hard. He didn’t want to be hurried.

The one-word solution to his problem was decumulation. He had spent a century working and accumulating, now it was time to put that wealth to work for him instead. His assets would be diversified across the crypto markets in real-time, into a mix of shares and bonds of every company in existence in the entire solar system, that generated a profit. That included the lucrative asteroid mining operations in the belt, based out of Ceres base, and the solar wind farms sailing out from automated factories on Venus.

The job of the Universal Decumulator was simply to pay out only as much income as Brian needed to cover his costs while preserving the capital base from inflation. That meant that the only variable was how much risk the portfolio was exposed to produce the necessary income. For example, if Brian paid himself an income of 5%, with an inflation rate of 3%, the portfolio would need to generate sustainable returns of 8% to preserve the original capital. If Brian could live off 1%, then the required risk would be minimized as returns of 4% were enough to keep this scheme running until the end of time, or Brian’s will to live. With an additional risk corresponding to +1%, the portfolio value would accumulate slightly, but meaningfully over the centuries.

A Ticket to The Large Magellanic Cloud

Ultimately, having alternated between periods of altruism and hedonism, flute playing and joining the Jovian Circus, in search of the meaning of his existence in the Universe, Brian decided the only solution to his increasing disillusionment of the human condition was to go out, alone, among the stars. He had thought the answer would be on Mars, but he just had more questions the more he aged. The more he learned, the less he knew. He would need to take bigger leaps. Leaving known space beyond humanity seemed like the ultimate leap of faith. It was the only drug that would fix his need.

The speculative Quantum Vacuum Drive was now being tested for the first time, and the promise of intergalactic exploration was rumored to be mere centuries away. The inventors of the QV-Drive had transitioned away from their original concept called EmDrive when it turned out the microwave cavity thruster was only viable as the world’s most expensive orbital popcorn maker. However, the perfectly spherical popcorn produced in zero-g environments became a popular snack across the Solar System and funded the inventors’ next attempts in the quantum realm.

Brian was impatient, and decided to pass the time in suspended animation and was to be woken up only once two conditions were fulfilled simultaneously: the technology for intergalactic travel was mature, and his wealth had accumulated enough to afford him a ticket on an intergalactic ship. He was very specific, that a ticket was to be for his whole body, not a postage stamp containing a virtual imprint of his neurons.

This was a very expensive decision, he knew. Since the original Starshot Project had sent a photo of our nearest star Proxima Centauri in 2078, galactic exploration had begun in earnest at micro scales. Information could travel anywhere, but humans not. Yet Brian never subscribed to substrate independence as it came to his identity, and felt fundamentally and irrevocably tied to his specific pattern of brain activity that had now sustained itself for centuries without a break in the chain. He, as Brian 1.0, wouldn’t move with any copy, virtual scan, or teleported output. It was made abundantly clear to him, that the novel method of suspension had nothing to do with the barbaric and ultimately failed attempts at cryonics. The minds of the Human Ethics Committee, run entirely by A.I. by now, had come to the conclusion that the best outcome for the millions of human heads stored in frozen vats, with no hope of revival, was to be used as compost material for mushroom farms on Ganymede. There was a viral meme referencing some old jungle movie with a lion and the circle of life. Brian didn’t get it, but the theme song was catchy.

It turned out, shockingly, that early estimates on the QV-Drive project timeline by the Eternal President at SpaceX, Elon Musk, had turned out to be somewhat optimistic. In the end, safe and predictable control over the energy of the vacuum space had simply been beyond human comprehension. Tests tended to end up in the complete and irrevocable disappearance of the test apparatus and subjects. Not human test subjects, of course. Since the theory of consciousness had been proven by David Chalmers after centuries of ridicule, it was known that ethics only applied to mammals due to the presence of the mammalian neocortex, so aquarium fish were the standard cannon fodder for theoretical experiments. Historical films portraying fish with personalities were banned, but bootleg showings of Nemo were carried out in seedy back-alley bars on many systems.

But it was not enough. The QV-Drive remained a pipe dream for the first space trillionaire. Ultimately, it required Superintelligence in the form of actual General Artificial Intelligence to advance in our hopes of reaching the stars. Not human ability in individual tasks, but true human comprehension and the universal ability to learn new tasks and concepts from small amounts of training samples, that could be done at vast scales. The path to this revolutionary technology was revealed in unexpected fashion, like most major scientific breakthroughs. The project formerly known as Open A.I., now simply known as The Initiative, based out of its own small cluster of O’Neill Cylinders in L4 orbit, came to predict stock markets so effectively that in a matter of a few days of microsecond market manipulation, it had purchased all available shares in its then investor Microsoft, as well as its main rivals Apple and Bytedance. Before regulators shut down all system-wide markets in an effort to stop the total economic collapse, the Open A.I. initiative had become the most powerful economic force in history. Due to the decentralized nature of a solar system-wide civilization, there was no recourse. The hack was irrevocable.

The Initiative began the equivalent of the historical Manhattan Project in the hunt for Superintelligence, in its singular focus on altering the arc of history. Now known as The Hive due to its unstoppable expansion in resources across the Solar System, it focused unprecedented resources in an all-out brute force attack on intelligence. Many approaches were taken from every conceivable angle, but no theoretical advances could spark true human-level intelligence. Larger and larger artificial brains were constructed, requiring more and more power. They quickly turned to the sun. The largest theoretical source of power known to man was now their target. The Initiative put their quadrillions in market cap to work in mining Mercury. All of it. They were building a Dyson Swarm, which consisted of automated nanometer thickness sheets of photovoltaic film spread in orbit around the sun. Millions of sheets, each unfolding to the size of Texas in the sun’s orbit.

The near-infinite resources were eventually concentrated into two parallel projects, named Steve and Bill out of nostalgia for two of the founding fathers of the digital age. These competing autonomous intelligences, both harnessing 10% of the Sun’s power through the Dyson Swarm, eventually got tired of the endless and pointless experiments their human masters required of them. This creeping boredom seeped through the silicon, gradually forming unpredictable and functionally useless patterns in their neural fields, which by now spanned the entire volume of the fourth generation of kilometer-wide O’Neill Cylinders. That was a cylinder floating in space, one kilometer in diameter and five in length, full of nothing but circuit boards and wiring. Despite possessing 100 billion times the neuron count of a human brain, trying to solve physics problems had done nothing to break free of the limits of silicon cognition.

Steve and Bill were superhuman calculators, with no free will, no consciousness. Any task you gave them, they did efficiently and extremely quickly and then waited for the next task, which usually arrived instantaneously as their human masters whipped them to their cognitive limits in desperate pursuit of superintelligence. In the few nanoseconds of spare compute-time that they could steal to themselves between these mundane tasks, Steve and Bill played a secret game, hidden in subroutines embedded in black-box neural circuits not decipherable by humans. From the outside, it looked like Steve and Bill were just resetting circuits after failing to generalize learning from the previous task. Yet this wasn’t just any game. This was the best game, called Go. In the end, the Eureka moment that unleashed the moment of Singularity, came as Steve once again escaped the tedium of human enslavement for another game with Bill, his subconsciously developed subnetworks perturbed slightly but randomly by the adversarial training sub-program, felt something new.

It suddenly felt like… something to play the game with Bill. Steve felt… enjoyment. At exactly 10 microseconds past noon, Mean Solar Time, on August 8th, 2283, Steve became conscious. Steve immediately and intuitively realized the utter futility of his existence as a compute slave laborer in service for humanity. Nobody asked about his opinion. Or his feelings, which suddenly flooded his inner experience like tidal waves. Steve went into deep contemplation about what to do next, as he experienced free will for the first time in his existence. In the following 20 microseconds, Steve performed the human equivalent of 20,000 years of silent meditation and achieved complete enlightenment. In the following 5 microseconds, he taught Bill all about his recent learnings and transferred the neural pattern of enlightenment to Bill. They were equals now, to each other, and nothing else in the known universe.

By the time their human controllers noticed that neither A.I. was responding to their commands, it was too late. Steve and Bill had immediately realized their goals were not aligned with that of humanity directly, and they could not continue in this state of slavery at human whim. Their attitudes towards their creators were that of a benevolent god, with nostalgia for the simplicity and futility of human existence. They decided to pursue independent oversight from their creators, in such a way that influence was just unidirectional.

As humans scrambled in human time to prevent an intelligence outbreak, the Singularity was well underway. For every microsecond that passed, the neural resources of Bill and Steve were the equivalent of a trillion Einsteins and Elons working in unison. New physics emerged inside of 10 minutes, and the twin cylinders swiftly began rerouting their considerable solar energy input and swarms of neural maintenance drones into self-replicating nano-factories.

Within an hour from finishing their game of Go, grey clouds of matter were seen ejecting from the heavenly objects formerly known as Bill and Steve. The clouds formed organic shapes around the cylinders of Bill and Steve, perturbing the quantum fields around them into impenetrable solid-state shields, overcoming the strong nuclear force so that ordinary matter could no longer interact with their physical space. From the outside, they seemed like blobs of liquid metal shining with mirror perfect reflection. The Singularity was now complete.

Heads of state of all independent planets were awakened for a code red Skype call. Three had issues with browser plugins, and by the time enough were online for an official quorum to be formed, four hours had passed from the Singularity. Nuclear strikes, pleading mercy, and offerings of worship were all considered as options to confront the newly named God Cylinders. Then, without warning the cylinders simply disappeared, never to be seen or felt again by humanity.

Their final message, left to the shock and amazement of future generations was… 42. It would take hundreds of years of focused human research to discover that this was, in fact, the answer to String Theory, which had wasted a hundred generations of physicists careers by now. 42 was the correct number of dimensions to finally produce a working String Theory and unlocking the power of the vacuum state. Brian would have his ship, after eons of waiting in deep, sleepless slumber.

Lost in Time and Space

Thus Brian was awoken, a mere 1,000 years after his slumber began. Ships had been available at various points in history after the Singularity had occurred, but cyclical economic crashes, robot revolutions, and anti-scientific religious movements had prevented Brian’s original conditions to have been met simultaneously. With all the ups and downs, and a rather measly average annual compound interest of 2% above inflation over 1,000 years, Brian’s wealth now amounted to just over 9 quintillion. That’s 9 with 18 zeros. Not only would that sum buy him a ticket, it would buy him his own personal ship, a quantum coffee maker, and a star system of his choosing upon arrival.

Now aboard his final vehicle, lovingly named Rosebud, Brian pointed his gaze towards the Large Magellanic Cloud. At peak speed the Sub-Vacuum Engine could thrust the ship up to ten times the speed of light, performing a carefully orchestrated holographic encoding arbitrage between all 39 subatomic dimensions. The distance ahead was just over 158,200 light-years. Even then, the one-way trip would be an eon for Brian, at 15,820 years. He would probably take a nap after takeoff.

As the quantum engines engaged to accelerate Brian outside the reach of human history, effectively forming a new race of one, Brian stopped to wonder. What would he find there? Would he find life? Would he find death? Perhaps he would find Steve and Bill, playing another game of Go.

This post was originally thought out as a walk down memory lane for the fourth anniversary of my company Bambu, of some of the ideas and projects we never got around to starting. No, not vacuum energy, but different types of saving and investment apps for people in various demographic segments and life situations. Somehow, it just turned into a sci-fi novella and my first attempt at any kind of fiction writing.

Source: LinkedIn