Robo-advisors have attracted hundreds of thousands of internet-savvy millennials, as well as people from China’s middle class who are looking for professional wealth management advisors but unable to afford the expense of a human financial planner. Over the past few years, tens of robo-advisor startups have emerged as an important part of China’s fintech industry. Amid this booming scene is Toumi RA.
An investment advisor for everyone
A robo-advisor is an online wealth management service that provides algorithm-based portfolio management advice without the use of financial planning professionals.
“Toumi RA offers every user asset allocation services that used to be exclusive for high-net-worth individuals. It enables everyone, especially the middle-class, to invest beyond the limit of region and asset category,” said Frank Wang, the head of Toumi RA. Frank Wang is also the Managing Director of Wealth Management at Toumi’s parent company, CreditEase.
A user needs to input basic information including a real name, national ID number, and address before he or she makes an investment via the official website or app.
It offers two options – the Toumi Robo-Advisor wealth management service, and the self-directed trading service in the American stock market. For the Toumi wealth management, the platform will conduct a short survey and then create a customized, cross-region and cross-asset class investment portfolio, based on the client’s risk tolerance. The entire process can be completed within several minutes.

Toumi RA was launched in May by its parent company CreditEase. The 10-year-old CreditEase is a finance and wealth management company; it has seen a series of well-known investors such as IDG, Morgan Stanley Private Equity Asia, and KPCB.
CreditEase’s peer-to-peer lending platform, Yirendai, was listed on New York Stock Exchange in December 2015.
Bringing American financial products to Chinese
“The American wealth management market is more developed and efficient than that of China, and therefore more stable in the long run,” Wang told AllChinaTech.
On top of that, the United States has more categories of assets available than China. There are several thousand exchange-traded funds (ETFs) in America, and these ETFs have lower fees than Chinese ETFs, Wang added.
Chinese clients, however, are in favor of the seemingly high-yielding and low-risk products, which Wang referred to as “an illusion that is disguised by China’s rapid economic expansion over the past decades”. Now China has entered a stage of economic transformation, and the risks can no longer be disguised.
“It’s a challenge for us to market our robo-advisor product in China and make users accept it. But there is an opportunity as well: the immature market leaves space for us to explore,” said Wang.
So far the robo-advisor uses the US dollar to allocate its clients’ assets, investing in the American and other developed markets, as well as emerging markets. “We invest in developed countries as well as emerging countries, across different asset classes. This includes equity, fixed income, as well as alternative assets such as gold, real estate, etc,”said Wang.
“We believe it is more efficient to invest in US dollar based assets in the short term,” said Wang.
A wealth management company
“A robo-advisor is essentially a financial product, not a technology product, and it needs a professional financial company to run it. CreditEase is a well-established wealth management company. We have a list of well-known partners, such as Morgan Stanley, KKR and Blackstone,” said Wang.
Inside the company there is an asset allocation committee. Wang himself is a chartered financial analyst (CFA) charter holder. He worked at UBS, Citi Capital Advisor (Citigroup’s alternative investment arm), and a multi strategy hedge fund before he joined Creditease. In Citi Capital Advisor, his unit managed a $30 billion private equity and hedge fund investment for Citigroup.

The startup rebalances its portfolio according to pre-set times. It will apply real-time auto-rebalancing in the future when it can effectively control the cost of transactions.
Users are concerned about whether their money is safe, especially when it involves P2P, as China’s P2P business was not strictly regulated when the industry first appeared. Bloomberg reported in February this year that Ezubao, once one of China’s largest P2P platforms, was found to be a Ponzi scheme. Over 900,000 victims lost a total of USD 7.6 billion.
“Client wealth security is our top priority. Users’ money directly goes to their portfolio accounts, and Toumi RA does not have the access permission for the money. Their brokerage accounts are supervised by the U.S. Securities and Exchange Commission (SEC) and protected by the Securities Investor Protection Corporation,” said Wang.
The four-step plan
The startup is hatching plans to take China by storm with a four-step plan.
The first and second steps are already in motion, those two steps being to explore the overseas and domestic market respectively. It achieved the first goal three and a half months after the startup was launched, according to Wang.
“Toumi RA truly enables its clients to invest overseas and into a wide range of assets. In the overseas market we invest through an optimized asset allocation model,” said Wang.
In the third and fourth steps more functions and features will be added.
“In the third step, we will develop to-business (B2B) financial services, on the current basis of to-customer (B2C) business. Toumi RA will provides services to individuals as well as institutions and corporates,” said Wang.
The robo-advisor will be more like a platform in the fourth step, and will see more products on its platform.
Will the robo-advisor appeal to China’s internet-savvy Millennials? Let’s wait and see.
(Top photo from Baidu Images)