What is holding Aussie robo advisers back?
Higher base fees, more complex fee structures and fewer investment options could be holding Australian robo advisers back from reaching the scale their American counterparts have, according to new research from Rainmaker.
Australia has six main companies offering robo advice (Absolute Advice, Clover, QuietGrowth, Six Park, StockSpot and Raiz) while the US has 16 robo advisers covering 4.3 million clients and $320 billion in assets.
“Australia’s robo advice market is immature. But it could grow to $25 billion if it were to develop, in population terms, to match the US market… if it partners with super funds, it could be much bigger,” Rainmaker executive director of research and compliance Alex Dunnin said.
Aussie robo advisers charge a median fee of 0.55% per annum which is higher than the US average fee of 0.35% per annum, the Rainmaker research found comparing to US market numbers from BackendBenchmarking’s Robo Report.
Fee structures in Australia are often broken down by the client’s account balance while US robo advisers in US follow simpler fee structures.
Further, US robo advisers used an average of 37 ETFs while building portfolios but their Australian counterparts only used a media on 11 ETFs.
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