SEOUL, June 27 (Korea Bizwire) – Would you trust a robot to manage your financial assets?
Korea’s Financial Services Commission (FSC) announced upcoming legislation on Sunday that will allow a ‘robo-advisor’, an AI-based asset management service, to serve as an investment advisor and a manager of investors’ financial assets.
Although robo-advisors have performed certain financial tasks alongside human professionals, they have never independently responded to investment inquiries or managed financial assets.
In order for financial institutions to implement the robot advisors, the services being offered must be verified by a ‘test-bed’ provided by the FSC for their stability. The institutions must also retain at least one human professional, tasked with responsibility for the operation and maintenance of the robo-advisors.
According to the revision, robo-advisors must analyze and rebalance investments at least once every quarter, and the content of their advice must not be focused one one particular asset or investment category.
Along with robo-advisors, the FSC also announced the creation of a new team of independent financial advisors (IFA), who will offer advisory services for mutual funds, derivative linked securities, and savings. The new service will relieve the current entrance barrier by reducing the minimum required capital of 500 million won to 100 million.
The commission is also improving the current incentive compensation system of public offering funds in order to boost the productivity of fund management. The prerequisites to receive incentive compensation will be eased to revitalize public offering funds.
Furthermore, individuals will be allowed to invest in private equity funds via diversified investment (through a fund of funds) with a minimum of 5 million won, while professional investors and corporations will also be permitted to invest in overseas private equity funds.
The legislation is expected to take effect as early as November.
By Kevin Lee (email@example.com)