‘Robo-advice’ an inexpensive option for financial planning

Only two companies offer low-cost computer-generated financial advice, although it is available for four years.

The robo-advisor (also known as digital advice) was provided by a licensed financial advisor and was a major step up from other digital tools, such as a chat-bot, which were designed to help investors to sort through a range of options and help them make the decision.

Digital advice has gone further to recommend and offer specific products, based on information provided by a user.

John Cuthbertson, tax leader for Australian and New Zealand Chartered Accountants, said the advice offered by an automated service was only as good as the information provided by users.

“It’s clearly suited for less complex financial decision-making and investments,” he said, adding that human interaction was needed for more complex investment decisions, such as estate planning.

“Because when you think about advice and the nature of estate planning or whatever, it’s not all financial, part of it is personal and what owners want for the next generation.”

Last year, global fund manager Nikko redesigned its free digital advice platform GoalsGetter to meet the needs of a new generation of investors using online trading apps, such as Hatch and Sharesies, to take better decisions.

GoalsGetter users can follow Nikko’s digital tips or use the insights generated to shop around.

The other digital advice provider was BetterSaver, which selected the best options for users from a range of investment firms.

BetterSaver made money by charging fees to fund managers for referrals, rather than users.

The Financial Markets Authority’s director of oversight, James Greig, said New Zealand was lagging behind in international growth in digital advisory services, but there was potential for change.

“The DIY stock trading platforms, they all have the FAP or financial advice provider license, so they have the potential to use that license and actually give that digital advice,” he said. declared.

“We didn’t see him today, but that doesn’t mean we might not see him tomorrow.”

In the meantime, Greig said DIY providers, such as Hatch and Sharesies, were directing investors to relevant investment information.

“So while they don’t morph into advice, per se, they provide access to great information. They help show predictions of what might be in the future. These kind of tools don’t morph into not in advice, but it really helps in decision-making.”

In the meantime, investors were urged to seek financial advice, if they had not already done so, particularly given the global uncertainty and continued volatility in financial markets.