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.
AUTHOR
Malavika Santhebennur
Recommended for you
As advisers risk losing two-thirds of FUA during the $3.5 trillion wealth transfer, two co-founders underscore why fostering trust with the next generation is vital to retaining intergenerational wealth.
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?
Amid the current financial adviser shortage, advice firm Link Wealth is looking to expand its financial literacy program for high school students across the country.
TAL Risk Academy has updated its range of ethics courses to help financial advisers meet their CPD requirements following adviser feedback, including interpreting FSCP determinations.
