Traditional skills key to building robo trust

27-Feb-2017

By Daniel Paperny

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Asset management expertise and portfolio rebalancing for clients in digital advice are vital to build customer engagement in the new age of advice interactions, according to robo-adviser Six Park.

In an interview with financialobserver, Six Park chief executive Patrick Garrett said that years of poor advice practice and misconduct meant gaining trust was a growing challenge for automated providers to engage customers in the digital age of advice.

However, he said there was an opportunity for providers to find their voice “in volatile times” by drawing on their expertise and digital capabilities to drive engagement with increasingly fee-conscious retail investors.

“A number of robo-offerings out there really don’t have real asset management expertise … and while robo-models aren’t about tweaking every week or month, the confidence that there are humans behind the robot is something that we’ve preached since day one,” Garrett said.

“The key question for every investor is how do you navigate through really tumultuous times in the market? Because the markets go through cycles – every four to five years there’s a bear market – and that’s where human investors tend to make the most mistakes.

“Our core platform … comes with what we call the ‘robo plus’ overlay of having the advisory board members who are active in terms of reviewing the asset allocation of the [exchange traded fund] landscape and global markets, including the impact of the election of [US President] Donald Trump and what that means for global markets.”

Founded in 2014, the Melbourne-based robo-adviser closed a $1.5 million capital raising at the end of last year and plans to use the funds to accelerate its product development and expand its offering.

“Our initial thrust and investment up until launch have been working on the platform, getting the system reliable … and not necessarily trying to add every bell and whistle that the users may want,” he said.

“What we’re doing now on the heels of the fund-raising is to look at different vertical markets and build on that platform, because a mistake that a robo-advice business model can make is to be ‘plain vanilla’ and try to exist in perpetuity; that’s a very tough proposition.”

He confirmed Six Park was looking at producing separate offerings in the coming months that would target millennials, self-managed superannuation funds as well as retirees through a “pension-mode” offering.

Garrett added that while digital advice was still in its infancy, artificial intelligence and machine learning would become tools that shaped its next iteration.

“But I think there’s still a bit of time for that to unfold as the uptake of robo advice is still pretty much in its early stages in Australia.”

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