Robo-advisors: Development and Regulation in China

Abstract

This chapter aims to analyze the regulation of robo-advisors in mainland China and give suggestions for its future development. In recent years, the Chinese government has set the development of smart finance as one of the economic policy priorities, including robo-advisors which rely on artificial intelligence and big data analytics. The development of robo-advisors in China has been facilitated by some local factors, such as strong consumer demand and a rapidly rising middle class, while at the same time faces significant challenges, such as the overly high and inconsistent entry threshold, insufficient asset management powers, weak fiduciary duties, and inadequate information disclosure duties. Based on a careful consideration of relevant overseas experiences and Chinese local conditions, this chapter argues that China should allow robo-advisors to provide discretionary asset management services and that a uniform regime should be established to cover both human and AI investment advisers. A streamlined and refined entry threshold should be set for the advisory service market. Robo-advisors should be subject to more detailed and functional information disclosure rules and fiduciary duties.

Keywords: robo-advisor; artificial intelligence; algorism; asset management; Fintech

JEL Classification: G24, K22