Page 27 - DIY Magazine September 2018

an edge in an industry that is still dogged by a lack of trust; Amazon has been awarded the top spot in Harris Poll’s annual corporate reputation survey for each of the last three years.
Bernstein suggested three ways Amazon could move into the world of finance:
The Full Monty – use a combination of AI and Big Data to directly manage assets and offer a full suite of financial products.
Analysts think this is unlikely because of the high level of risk it brings; ironically, Bernstein believes the biggest danger is that the experiment would work so well that it would accelerate the backlash against how much user data Silicon Valley controls.
Create a financial ‘supermarket’ that would give customers the option of buying mutual funds and ETFs through Amazon that are managed by external financial professionals. Amazon’s massive reach and wealthy customer base would give it significant leverage to
AMAZON’S MASSIVE REACH AND WEALTHY CUSTOMER BASE WOULD GIVE IT SIGNIFICANT LEVERAGE TO NEGOTIATE FOR LOWER FEES
negotiate for lower fees from traditional asset managers, who would take most of the regulatory responsibility should investors lose money.
Build, partner or acquire a robo adviser; Amazon could launch an automated wealth management platform that makes investment decisions by selecting stocks, funds and commodities.
While robo advisers like Wealthfront and Betterment in the US have attracted billions of dollars in assets, the biggest headwind to their profitability has historically been the high cost of client acquisition; that wouldn’t be a problem for Amazon or other big tech companies that have a loyal following of customers.
‘This could be a game changer in the economics of robo advice,’ said Bernstein.
‘Alexa, buy lean hogs’ ‘Smoked or unsmoked?’
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27 DIY Investor Magazine | Sep 2018