Robo-Advice is Coming

Read More

The Financial Markets Authority has given the go-ahead for personalised advice to be offered online. Such advice is referred to as ‘robo-advice’. Under current legislation, personalised investment advice can only be given by certain categories of advisers in accordance with the Code of Professional Conduct for Authorised Financial Advisers. From 2018, there will be an exemption which will allow personalised advice to be given electronically, however the advice given must meet the same standards that apply to Authorised Financial Advisers.

So what does this mean for investors? The principal advantage of robo-advice is the low cost. Human involvement is limited to designing the tools and algorithms that are used to provide advice. These tools can then be used directly by clients without the need for a person to be involved in the advice process. Clients using a robo-advice service will answer questions about themselves online to provide the information an adviser would normally collect. This can include information about assets, liabilities, income, expenses, family circumstances, working life and retirement goals, attitudes towards financial risk and so on. The on-line systems will then use built-in logic to make recommendations to clients based on the information provided. This could potentially include advice on how to pay off debt, how to manage income and expenses and how to save for retirement. However, initially the focus will no doubt be on setting up investment portfolios, including KiwiSaver. Clients will receive a recommendation on how best to set up their investments to achieve their goals. They will then be able to invest funds in the recommended portfolio, and the portfolio will be automatically managed to optimise the investments. This service will be of particular interest to clients with smaller portfolios and clients with a good understanding of investment markets who prefer a DIY approach.

Related Articles

Economy
Liz Koh

Budget Winners and Losers

The latest Government budget had something for everyone but while most households will be a few dollars a week better off, there are some clear winners and losers. In the winners’ corner are businesses, those on high incomes, and savers. The biggest losers are property investors who have built large portfolios financed partly by tax rebates.

Read More »

Top Up or Miss Out

The end of June is an important date for KiwiSaver members. The financial year for KiwiSaver runs from 1 July 2009 to 30 June 2010 and if you have contributed at least $1,040 to KiwiSaver during that time, you will be eligible for the full amount of Government tax credit to be paid into your KiwiSaver account in July.

Read More »

Responsible Investing

There is a worldwide trend for investors to want to make a positive contribution to the world by investing in companies that are socially and environmentally responsible. If you are passionate about the effects of climate change, the scarcity of food and water, and social or environmental policies in general, then you will no doubt wish to ensure that the companies in which you invest are going about their business in a manner that is consistent with your views.

Read More »

Helping You Live your retirement To the Max

Keep in touch

Fill in your details and we’ll get back to you in no time.