Robo-advice not holistic
Many current robo-advice models fail to consider the investments investor already have, both outside and within superannuation, which could lead to poor outcomes for investors, InvestSmart said.
The online financial services portal argued robo-advice as it stands directs investors to risk-profile ‘matched' portfolios, without a holistic approach.
Chief executive, Ron Hodge, said many online investment management tools expect investors to go along with robo-advice outcomes without educating them.
"Excessive focus on the end product and lack of a broader educational component are all issues that can limit the value of robo-advice for self-directed investors — or at the very least mean it should be taken with a significant health warning," he said.
While robo-advice had the potential to deliver low-cost investment planning solutions for ordinary investors, technology in its current form had not yet been able to deliver.
Robo-advice should be a holistic investment tool that educates investors rather than selling investment products, Hodge said.
Recommended for you
With the highest number of candidates in a year sitting the latest financial advice exam, a surge of new entrants are expected in the coming weeks, according to Wealth Data.
AMP has launched a range of five diversified index managed portfolios on its North investment platform, targeting a younger client demographic.
An NSW adviser, who advised over 120 clients after falsifying her financial advice exam results, has been permanently banned by ASIC.
ASIC has released the results from the latest financial adviser exam, the first to be run since changes to its structure earlier this year.