Stockspot founder Chris Brycki’s money is on robo-advice

Chris Brycki is the man behind Stockspot, one of Australia’s first companies to offer what has come to be known as “robo-advice”. Stockspot recently made headlines after Graham Tuckwell, the Australian tycoon behind London-based ETF Securities became an investor. Brycki first came to the market’s attention in 1999 when as a schoolboy he became one of the youngest winners of a stock competition.

How does robo-advice actually work and how is it different to seeing a regular adviser?

The most important thing when investing is getting your asset allocation right. Not so much picking stocks or when you should be getting in or out of the market. Working out what assets you should be investing in will determine 90 per cent of the variability of your results.

Professionals tend to focus on their own little speciality area like shares. In contrast Robo advice helps people actually focus on the asset allocation side. Costs are also one of the biggest drivers of your returns, so automating it offers a much lower cost.

If you give people too much control over their investments they make mistakes due to behavioural bias. They pull out at the wrong time, they choose the wrong stocks …

Giving people too much control is a bad thing. We don’t encourage our investors to weight their portfolios to particular assets like oil. We also know investors are likely to chase things that have been popular in the past, but that doesn’t guarantee they’ll do well.

A lot of younger investors are wary of ETFs on ethical grounds. What is Stockspot doing to tackle that?

It’s something that all robo-advice companies are dealing with. We give customers the ability to add “themes” to their portfolio. So we control the core, but consumers have some control over what’s added and then we “risk manage” it for them. Some of the themes include ethical shares, dividend shares, and global property.

It must difficult to sell robo-advice to some consumers, especially older investors.

Everyone reads the press and decides they have an edge over the market, that their information is unique. But everyone is seeing the same information and doing the same thing. The only way people learn is by losing money.

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Source: Stockspot founder Chris Brycki’s money is on robo-advice – The Australian