How do robo advisors make profit? Are you involved in high frequency trading?

Answers from the panel!

Asheesh (Kristal.AI): In our case, we have a lot of affluent credit investors who are putting in larger sizes, which for them nothing is free. This free part is only for the smaller sizes, which is Kristal's way of financial inclusion, for people to come on board. In terms of making money, the main things that robos earn from are performance fees, management fees, forex conversion charges and custody fees. Given that sort of price segments that we're in, we may need to run at least hundreds of millions or even half a billions of portfolios to get to breakeven level. And we do not do high frequency trading, at least for everyone here.

Michele (Stashaway): We charge a percentage of assets per annum on our fees, in our case it's 0.2% to 0.8% across a spectrum, that's how we generate revenue. That includes the cost of trading and brokerage, which is a cost for us. There is also the cost of technology and payroll. So as we continue to develop the platform, we do need quite a bit scale to make the company profitable.

Tai Zhi (Autowealth): We want to make ourselves profitable as soon as we can to remove this risk from the minds of investors. In the next one quarter, we would turn profitable. We make sure we structure things right correctly, and allow technology to do most of the work so that we do not spend so much on the payroll every year.

For more discussions on SeedlyTV S2E04, you could check out the video and Q&A here! ​​​

This was one of the question in the recent SeedlyTV (link below). Roboadvisors make profit from their commission fees (I know it's low). Increasing assets under management = increase revenue.
https://www.youtube.com/watch?v=L7Kj3iMK7cM