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
Financial advisory services have historically been used by a minority of the population. The acceptance of these services is growing, as well as their use. However, it is important to consider that a significant portion of the population in Mexico is involved in informal commerce. Current industry trends are directed to financial inclusion (usually offering the most basic financial products, such as a deposit account or credit card). Although investment products have seen exponential growth in the recent years, investment accounts are still very rare and only used by a minority of the population (even more so for advisory services).
Obligations and requirements to provide financial advisory and broking services, or ancillary services described above
Financial advisory services are regulated by the Securities Market Law (Ley del Mercado de Valores) and its secondary regulations. Providers must be registered with the CNBV, and in order to be granted with the registration before the regulator, the financial advisors have to comply with requirements, which include a credit history check, certification from an industry association and compliance and anti-money laundering policies.
The FinTech amendments to financial laws have included the option for the CNBV to issue specific regulations for robo-advisors, who have not been published as of this date.
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
As of the present date, several financial investment advisors have adopted a digital approach to their commercial operations in digital platforms. As a result, the CNBV is expected to begin modifying general rules exercising their regulatory authorities for robo-advisors to operate in the Mexican market.
Market size for financial advisory and broking services as well as adjacent services and biggest companies in this business area
The opportunity is extremely high. It is estimated that only 2% of college educated individuals in Mexico are active investors in the stock market. Most investments in the stock market are carried out by institutional investors, which include pension funds.
As described above, the number of accounts has grown exponentially in the last few years. The introduction of a second stock market as well as digital app-based brokers has sparked interest of the market.
According to December 2021 figures published by the CNBV, the investment market is controlled by 36 authorised broker dealers in Mexico. Measured by value of total assets, the biggest brokers according to their market shares are Casa de Bolsa Banorte, S.A. de C.V. (34.36%), followed by Goldman Sachs México, Casa de Bolsa, S.A. de C.V. (7.38%) and Invex (6.88%).
No public information is available for advisory services.
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
Advisory services are expected to grow as the market growth of investment accounts continues to increase at double digit numbers. FinTechs interested in advisory services and/or robo advisory models should consider that regulation is expected to increase in the mid-term.