Robo-advice poorly defined in Australia
Robo-advice is a misused term in Australian financial services that has focused mainly on risk profiling and compliance and should be considered separately from online advice, according to the head of an advice group.
Money Solutions chief executive, Ross Bowden, claims that ‘robo-advice' is a misused term in Australia and has been applied incorrectly to online, digital and process driven advice delivered electronically, and that it differs from its meaning in the United States.
"In the US the term is largely used around exchange traded funds (ETF) and used for risk profiling and portfolio construction around an ETF framework. In Australia robo-advice has mainly been used for risk profiling but is considered as a form of digital advice," Bowden said.
According to Bowden online advice should be more than mathematically programmed tools and questioned how much take up there would be in services which provide only a risk and compliance framework that produced an ‘SOA with caveats'.
"This area will continue to develop but it will be another channel different from advice and is likely to be popular with younger investors," Bowden said.
Bowden said questions were still being asked about how to connect online advice with phone based and personal advice and keep the adviser at the centre of the relationship.
He said Money Solutions, which is part of the Link Group and provides advice to members of a number of industry funds, had seen these larger funds working through these issues.
Bowden said if these funds can build integrated advice tools that track member behaviour across any advice channel they would begin to offer more customised advice.
"Super funds are asking if they build online advice will their members come and use it but if it is built into the member journey and it part of the process then it will be used," Bowden said.
He said this would be an important development because members calling super fund call centres are usually seeking quick answers which mask their advice needs and that Money Solutions planners had provided 250,000 pieces of limited, scaled and complex advice in the past decade through this type of contact.
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