Retail investors are more DIY: report

The rise of robo-advice and the increasingly self-directed nature of retail investors has important implications for the future of advice delivery.


By Daniel Paperny

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Emerging technologies such as robo-advice and an expanding access to products for investors have shaped Australia’s investment landscape as a rising class of do-it-yourself investors begins to surface, according to a new joint report.

Launched in partnership with Deloitte Access Economics at a media event in Sydney yesterday, the Australian Securities Exchange (ASX) “2017 Australian Investor Study” examined key megatrends and their impact on the Australian investment landscape.

It also explored risk attitudes, the use of diversification among investors as well as their perspective of new forms of technology and innovation such as the growing proliferation of robo-advice tools.

In a survey of 4000 Australian residents, the report found an increasingly do-it-yourself attitude among investors in the way they research and make decisions with 48 per cent relying on internet searches for information and 45 per cent using professional financial advisers.

In addition, 60 per cent of Australians hold investments outside their institutional super fund, with these investments typically comprising cash, property and on-exchange investments.

While the proportion of younger Australians, 18-to-24 year olds, investing has doubled from 10 per cent to 20 per cent over the past five years, the report noted the potential for robo-advice to make advice provisioning “faster and more easily customised” could change the investment landscape further by providing increased convenience and better value for investors.

Speaking to financialobserver, Deloitte Access Economics director Mike Thomas noted the increasingly self-directed nature of retail investors and preference for digital platforms had prompted an archetypal shift in their behavioural demands and attributes – particularly among millennial investors – which had significant implications for the future of advice delivery and provisioning.

“Investors want advice but still want to make the decisions themselves once they have that advice and so if robo-advice is another way of delivering that advice to them, there’s still the next step of them deciding what to do with it,” Thomas said.

While robo-advice was still in its relative infancy in Australia, Thomas noted its disruptive capacity to change how advice was tailored to an individual customer’s needs, receiving it when they want it and in a more accessible manner.

“If robo-advice can be done [well], it [will] save costs on what a traditional adviser might charge but also be available to them 24/7,” Thomas explained.

“It’s an area where people are still feeling their way a bit, obviously [the industry is] wanting to have the right legal safeguards with all of this [digital advice] technology but it’s certainly something that looks likely to grow and will continue to grow in the foreseeable future.”

The survey also found that young investors were typically more risk-averse with 81 per cent of investors under 35 seeking guaranteed or stable investment returns, while 41 per cent of investors over the age of 55 were comfortable with some variability in their returns.

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