Robo-advice finds market in digital-savvy older investors
Hey robo-advisers … You’re looking the wrong way! Millennials have no spare money and don’t care about investing just yet — but older Australian investors are more than ready to play.
One survey after another in the US shows older investors are actually super keen to examine low-cost digital-based financial services.
And closer to home, it’s worth pointing out that a recent survey from the SMSF Association revealed a higher portion of Australia’s one million SMSF operators were willing to try robo-advice than the general public.
No doubt this emerging reality has not been lost on the kingpins of Australian finance — the banks. Earlier this week, NAB funds management division MLC took an each way bet on robo-advice, launching a two pronged service aiming robo-style products at both millennials and what MLC’s Lara Bourguignon called “digital-savvy pre-retirees”.
MLC’s move makes a lot of sense because as the specific merits of robo-advice become clear, it is now obvious that a mature investor who is focused on fees and experienced enough to know what you don’t need to pay for — could actually be the winner here.
There is understandable scepticism over robo-advice because there is a genuine fear that you might not be as well looked after by an algorithm-based service as you might have been by a human.
But to look at it another way, if you only need precise tax and administrative advice while independently running your own portfolio, then the idea of robo-advice suddenly becomes a lot more appealing.
One of the new entrants to the Robo-advice market is Six Park with an advisory board led by former finance minister Lindsay Tanner. As Tanner pointed out at the launch of Six Park, one of the key target markets for his service would be SMSF funds, where a lack of diversification is a recurring problem.
Though it is early days, it would seem that robo-advice is actually just what many SMSF operators may need — a pathway to investment options traditionally excluded due to expense: This might include overseas shares, infrastructure, bonds, emerging markets and more.
And if it is the case that ETFs (exchange traded funds) are the primary vehicle for this expansion, then most investors will probably accept their limitations in return for new opportunities.
But it is in the near future where the promise of robo-advice may really open up.
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Source: Robo-advice finds market in digital-savvy older investors – The Australian