Financial advisory and broking services including robo advisory and auto-trading
FinTechs belonging to this category offer advisory and broking services for investments usually via an internet platform.
Robo advisory services usually offer an investment proposition following a series of questions concerning the personal financial background and the risk-bearing capacity of the user. Sometimes the respective platform also enables the user to directly execute the proposed investment.
Auto-trading concerns all services which automatically trade on behalf of the customer according to his or her specifications.
Apart from that some FinTechs collect and offer merely or as an ancillary service market information or operate comparison portals to increase the transparency of the capital markets and to help the investor with his decision-making.
There are also FinTech-advertising-services which advertise various financial services or products.
Attitude of the country towards modern financial advisory and broking services
Robo advisory and auto-trading services are growing in Argentina. Traditional financial institutions and banks are incorporating robo advisory services as a new product within their offering of financial services to their clients. Robo advisory and auto-trading have the great advantage of turning investment advisory experience for clients easy and cost efficient. For example, we can mention Santander Bank, which has recently launched its “Openbank” platform in Argentina offering Santander clients auto-trading services. We can also mention other digital banks in Argentina offering robo advisory and auto-trading services such as Brubank, Wilobank, Quiena, Front, Reba, Ualá, among others.
Obligations and requirements to provide financial advisory and broking services, or ancillary services described above
Depending on the specific financial advisory, companies providing auto-trading and robo advisory services may be required to register and obtain a special license before the CNV as referred in Section b (Asset and portfolio management) and before the market in which they act as brokers for the intermediation with assets negotiated under public Offering (ex. BYMA, ROFEX, MAE). For instance, if the auto-trading platform not only provides financial advice but also allows users to execute the proposed investment, that would mean that such company offers trading services and should, therefore, be previously authorised by CNV to carry out such financial activity.
Additional comments regarding the legal situation for financial advisory and broking services, or adjacent services or what FinTech’s must be aware of in this business area
In the same way as referred in Section b) (Asset and portfolio management), FinTech companies in Argentina providing auto-trading and robo advisory services should be aware of always complying with data protection regulation (provisions of Data Protection Law 25,326) and regulations on prevention of money laundering and financing of terrorism issued by the UIF. With respect to anti-money laundering, it is important to mention that depending on the type of financial services offered by Fintech companies, these may qualify as obliged parties (“Sujetos Obligados”) under Law 25,246 and, therefore, be obliged to comply with the information and surveillance regime imposed by the UIF.
Market size for financial advisory and broking services as well as adjacent services and biggest companies in this business area
The WealthTech segment is growing fast in Latin America. According to a study published by Finnovista and Mercado Pago “Evolución del Sector Fintech en Latam”, by the end of 2021 there were 222 FinTech companies within the WealthTech segment. The top nine (9) WealthTech companies in Latin America have raised a total of US$ 930 million in venture funding during 2021. On fourth place of this ranking is the Argentine company Inviu, which has raised US$ 15 million in its last financing round.
Additional comments regarding the economic situation for financial advisory and broking services as well as adjacent services or what FinTech’s must be aware of in this business area
A key indicator which shows the exponential growth of the WealthTech segment is given by the fact that 61% of the population in Latin America do not have savings/investments and/or they save/invest informally (holding cash in their homes).