The world of financial advice is changing. Already in use overseas, robo-advice is on its way to New Zealand. No, that doesn’t mean that robots will be taking over any time soon! Robo-advice is all about providing automated financial advice services that present people with relevant information and recommendations in an accessible and engaging way. The government is interested in introducing this model to New Zealand so let’s find out more about it.
What is robo-advice?
The first point to stress is that robo-advice won’t take over or replace the human financial adviser. It’s a tool that both investors and financial advisers alike can utilise when making decisions about finances. Essentially, robo-advice is a digital platform that uses a series of sophisticated algorithms to provide information to clients on aspects of their financial situation and future goals. Typically a robo-advice platform will collect data about your circumstances through an online survey and based on this presents you with information, advice or recommendations.
A human financial adviser will still be available for those that want to discuss their situation in more detail or who want reassurance that they are doing the right thing.
Who is it aimed at?
Simple and intuitive to use, anyone will be able to access robo-advice but it’s primarily aimed at the younger generation of digital natives. This generation has traditionally been under-served when it comes to financial advice. Usually their focus is not on long-term financial planning or investments and they don’t always have the minimum threshold amounts to see a financial adviser.
What are the benefits of robo-advice?
One of the main benefits is that it allows individuals to have control of their finances. People will be able to confidently make informed decisions and take action for themselves. Information and options will be presented in a much more engaging way than the traditional graphs and numbers, making it easier for you to comprehend what the data is telling you. The evidence from overseas suggests that robo-advice platforms are really simple to use and are engaging and fun.
How soon will it be introduced in New Zealand?
The government has signalled that the legislation is going to change; however, it will be a while before we see these robo-advice platforms being readily available. There are a whole series of issues that need to be worked through first such as ensuring there are robust guidelines in place and a proper framework that protects consumers.
The robots are coming!
Although we may not yet know when, there’s no doubt that robo-advice is coming to New Zealand soon, and it’s likely to change the face of financial advice as we currently know it.