It was a subsidiary of China Construction Bank Corporation, one of China's top four banks. The asset management industry in China had always been quick to leverage technological change to gain an advantage. Since the debut of robo-advisors in 2015 in the Chinese market, this change was coming even faster. As a rising star in the area of financial technology (FinTech), robo-advisors applied automated algorithms to realize investment goals for clients in a cost-and time-efficient method. Between 2016and 2018, not only FinTech startups in China rushed to launch robo-advisor platforms, but also renowned internet companies like Alibaba and traditional financial institutions like big banks, asset management companies, or security firms in China began to introduce robo-advisory services into their existing business. Artificial intelligence had brought both opportunities and challenges to traditional investment managers. Mr. Sun and his management team needed to analyze the characteristics of the Chinese market and the pros and cons for launching robo-advisory services, and decide CCB Principal's strategy going forward. Should they start offering robo-advisors as a core service? The case reviews the origin and development of robo-advisors in the US, Europe, and Asian markets, and introduces the unique features of the asset management market in China. Thinking from the perspective of a chairman of one of the top asset management companies in China, students are expected to look into the characteristics of domestic Chinese investors (mentality, investment goals, level of sophistication, etc.) and the Chinese market (political and regulatory environment, technological application, product development, etc.), analyze the advantages and constraints for the development of robo-advisors in China, and come up with a suitable business model for CCB Principal's future strategies.
The case explores the decision of a financial advisor in Hong Kong whether to recommend leveraged and inverse ETFs (L&I ETFs) to her clients. The case introduces unique features of L&I ETFs, methodologies of performance calculation, their relative merits and risks comparing with alternative products available in the market including derivative warrants (DWs), Callable Bull Bear Contracts (CBBCs), traditional ETFs, futures and options. Thinking from the perspectives of a financial advisor, students should combine the knowledge of L&I ETFs, the given market data, the market views of the financial advisor, as well as the clients' characteristics (age, educational backgrounds, future investment goals, etc.) to come up with tailor-made recommendations for each individual client.