What is RoboAdvice?
RoboAdvice is otherwise known as automated investment management and is a buzzword in fintech at the moment. It is essentially a computer program comprising complex algorithms and mathematical models that aims to match a client’s risk profile with an asset allocation.
There are a number of automated investment management platforms available in Australia now, including Stockspot, QuietGrowth and Ignition Wealth. A number of financial product providers, including Yellow Brick Road, Macquarie and National Australia Bank, are also rolling out their own versions of RoboAadvice tools.
Robo-advice has been very successful in America due to their ability to reach critical mass (population) and scale. This has also been spurred by a much more mature ETF landscape which is the lifeblood of robo-advisers both from the perspective of modelling portfolios and because it has created so much choice that there is a need for automated advice.
Australia on the other hand doesn’t have the same population mass and to date has not had the same breath of ETF choice – although this is changing and ASIC recently released a consultation paper and a draft Regulatory Guide on regulating digital financial product advice.
Two examples of RoboAdvice platforms currently in Australia include:
Stockspot was the first service in Australia to offer automated investment advice online and has seen a surge in popularity since launch. Stockspot provides automated investing and offers ETF solutions for self-directed investors via 14 different themes and 1,000 different portfolio combinations combined with roboadvice algorithms.
QuietGROWTH manages, with a long-term perspective, a risk-optimised and diversified portfolio of up to 8 ETFs with a portfolio customised to the risk tolerance of investors. QuietGROWTH aims to offer better quality portfolios and a better user experience at a lower cost compared to the competition, as well as better serve the long-term investment management needs of clients compared to a similar service provided by a traditional adviser.
Automated Investment will not be for everyone – but for self-directed investors that want to avoid personal advice, they are an option to consider.