Robo-advice too focused on funds management


By Sarah Kendell

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Robo-advisers in their current form were a replacement for fund managers more than financial advisers as they automated the investment process rather than improving the quality of insights delivered to customers about their financial circumstances, according to Investfit.

Speaking to financialobserver, Investfit chief executive Ed de Salis said the fintech industry to date had been focused on automating the funds management process while neglecting opportunities to add value to the user experience for end investors and advice clients.

“We see a lot of robo-advisers that are really just a replacement to your typical fund manager – they are saying you can put your money with us, it’s all online, it’s really cheap and we have a couple of model portfolios,” de Salis said.

“It doesn’t add a lot of value for the client except the fees may be slightly cheaper – our position is that we are trying to develop technology that helps the adviser or practice in producing better-quality advice and producing it faster.”

He said the group’s technology, which allowed advisers to model a number of financial scenarios and produce statements of advice for clients in real time during an initial consultation, significantly reduced the time taken for advisers to procure new clients, while providing clients with insights that allowed them to immediately see the value in a relationship with an adviser.

“The technology allows you to crunch through a large number of portfolios and determine the best investment advice for the client, simulate the outcomes many times and give a level of certainty around what outcome the client could expect,” he said.

“Our clients are saying that they are seeing productivity gains in the order of 80 per cent in terms of paraplanning, because ordinarily it might take an adviser roughly six man hours to produce a simple statement of advice.”

The group had six advice groups already using the technology, including the financial planning arm of Mortgage Choice, and was going through due diligence to become the technology of choice for two large institutions, he said.

“We would like our technology to be used within a third of the dealer groups across Australia – that is our first goal and we also have aspirations to go international,” he said.

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