Would you let a robot manage your finances?

Trust in financial advisers has plummeted and robo-advice is tipped to flourish.

robo advice

Trust in financial advisers has plummeted in the wake of the financial services royal commission, but would you let a robot manage your finances?

Adviser Ratings, which rates and publishes comments on financial advisers à la TripAdvisor, predicts that consumer use of robo-advisers will grow by 43 per cent per year over the next four years, driven in part by digitally savvy older Australians. As a result, it has announced an industry-first review register of direct-to-consumer digital financial planning solutions, or ‘robo-advisers’.

What is robo-advice?

The Australian Securities and Investments Commission (ASIC) says: “It is financial advice delivered online via computer, tablet or smartphone. It uses algorithms and technology in place of a human financial adviser.”

ASIC says robo-advisers can offer convenient, low-cost financial advice, but warns that consumers should be sure this style of advice would suit their needs.

Adviser Ratings believes robo-advice should complement rather than hurt traditional advisers by improving the accessibility and affordability of advice and attracting new types of customers.

Adviser Ratings CEO Wealth Mark Hoven said: “There’s no question that the traditional financial advice industry today has an image problem, compounded by the findings from the 2018 royal commission.

“The fact that only 14 per cent of Australians receive advice, despite the large majority needing assistance with their finances demonstrates a huge unmet opportunity.

“We believe the digital financial planning world can start to bridge this gap and have launched a review register of 36 robo-advisers to provide consumers with more transparency about this emerging world of finance solutions.”

Digital financial planning tools typically offer help with budgeting, investing, superannuation and post-retirement services. They are delivered online and are personalised by the consumer, thus removing possible fears about being judged or embarrassed.

“Given Australians’ love of technology and smartphones, these tools offer significant potential to improve consumer engagement with and control of their personal finances,” said Mr Hoven.

“Because these digital tools are breaking down holistic advice into its component parts and [are being] delivered through the streamlined anonymity of an online world, they are helping to overcome previous advice roadblocks and providing accessibility to professional financial help for more Australians.”

Challenges for the digital advice sector included building trust with consumers, protecting customer data and managing an increasingly heavy administrative burden imposed by financial regulators, Mr Hoven said.

How do you feel about robo-advice? Have you used a robo-adviser? Was the experience satisfactory?

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    COMMENTS

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    HarrysOpinion
    24th Oct 2018
    10:53am
    Robots don't think for themselves, they do what humans program robots to do and that includes self-serving financial advice.
    johnp
    24th Oct 2018
    11:33am
    Agree with HS. Both fin advisers and robo are set up to benefit themselves and not the client. Believe though that there are some fast algorithm based technical analysis incremental style systems that would work.
    Old Geezer
    24th Oct 2018
    11:34am
    Robots are only as good as the people who programmed them and it would not surprise me that they had more of a vested interest than human financial planners.
    johnp
    24th Oct 2018
    11:47am
    agree but the trick may be in finding those with the higher capabilities, their past records etc
    Old Geezer
    24th Oct 2018
    12:03pm
    There was a survey recently that one did where it told you how financially literate you were. I failed it on first attempt but when I passed it with flying colours it became apparent to me that people are meant to fail and therefore seek assistance from the people running the survey. This is how I see these robo financial planners fleecing people.
    Priscilla
    24th Oct 2018
    11:50am
    Sounds like "a wolf in sheep's clothinig" to me!
    john
    24th Oct 2018
    12:13pm
    Robots have been controlling our money the day our pay packets went directly into the banks. We lost control and some computer started doing it. With a little input from humans. Now the advanced computer age has created a gigantic monster known as the Banking system, where you cannot talk sense to a human or they are so indoctrinated with the BANK protocols in how to deal with customers . And are trained to disguise overkill with interest rates on loans
    ( I know! The ombudsman saved me from one smaller bank)
    so you may as well be talking to a machine. But in general the whole place is run by machinery, and it is now the beginning of the end of control for humans, the majority that is?
    Still the Roman elite had there plebs, the modern era has created its own, with smart alec banking and the governments too weak to stand over them, and if they do after this Royal Commission I'll be surprised!
    Thoughtful
    24th Oct 2018
    12:23pm
    I can see great benefit in a well-designed system that explains options . It would need to be tested for quality of options and continuously updated. It would also need to come with a one off price tag. Sort of like an digital independent financial advisor. Information data could be entered without collection of identifying data, similar to Centrelink's Age Pension calculator. Would save a lot of time searching the net for knowledge.
    KSS
    24th Oct 2018
    12:52pm
    Like all artificial intelligence, it can only respond to known variables with formulaic answers. Deviate from the 'norm' and it can't think for itself. Robots would give generic advice at best.
    Rosret
    25th Oct 2018
    7:05am
    Absolutely as long as you have the right software developer and expert financial adviser uploading the correct data.
    In fact they could(and do) control the markets - our own little hedge fund managers.
    Of course they are very powerful and especially with AI and fuzzy logic technology.
    - and needless to say they are already in operation and making institutions billions. However they aren't working for us - they are working for them.

    25th Oct 2018
    8:00am
    I don't trust robots - period.
    Old Geezer
    25th Oct 2018
    10:07am
    I trust people less.
    gerry
    26th Oct 2018
    5:57pm
    IM 81 with no next of kin ,I will have to rely on Public trustees if I get incapacitated ,but not very amused when I went o update my will and they didn't know who I was,The little girl in the office did locate my details but not at their office,,,who Is going to decide which funds to use first and what about the jamjar in the garden.Some guys told me they were employed with their truck to empty old guys residence and they turn up with the stuff and the solicitor would say take it to the dump, Theyd keep the grandfather clock and the electric tools for themselves