A recent report by Kiwi Wealth The Rise of the Money Robots: Kiwis’ attitudes to roboadvice shows that while most people (92%) have never heard of robo-advice before, once it was explained to them around 20% of people said they would use robo-advice (as cited by Stock, 2016). Robo-advice refers to receiving financial and investment advice from an automated, online service or platform as opposed to seeing a traditional financial adviser.
The benefits of robo-advice can be huge. It significantly reduces the cost of receiving financial or investment advice, meaning that expert advice is no longer only for the very wealthy. The online nature of robo-advice means that you no longer have to go and see or talk to a financial adviser, instead you can receive instant, online advice at anytime from anywhere around the world, making it extremely accessible and easy to use.
While the Kiwi Wealth report highlighted that around 50% of respondents still felt they would prefer a human financial adviser, other studies are pointing to the popularity of robo-advice with the younger generation, especially millennials. A focus group led by MinterEllisonRuddWatts found that millennial professionals would embrace automated financial advice platforms, as millennials are interested in and early adopters of technology, they trust and understand the automation, the ease of online access, and the reduced cost.
New Zealand has been slow on the up-take of robo-advice, however globally it is becoming hugely popular, including in the U.S. and Australia. A report by the Business Insider forecast that by 2020, robo-advisors would manage 10% of global investment assets under management – that equates to around $8 trillion. In New Zealand, the powers that be have recognized the importance of robo-advice in helping New Zealander’s access advice, and the Financial Markets Authority is ushering through new legislation to encourage robo-advice companies.
Despite New Zealand’s slow uptake the robots are landing, with Ilumony , New Zealand’s first robo-advice platform in beta testing mode and nearly ready for launch within New Zealand. Ilumony provides free advice to all New Zealander’s about their KiwiSaver investment, and will soon extend their offering to include advice and investments outside of KiwiSaver. Ilumony has taken a hybrid approach to robo-advice, recognizing that while most people want to enjoy the benefits of an online platform such as cost savings and ease of access and use, there are a lot of people who still want to talk to a financial adviser at some point in time.
Ilumony Founder and CEO, Rachel Strevens, says “We are incredibly excited to share Ilumony with New Zealand, and open up the door to financial advice to help Kiwi’s make better financial and investment decisions. KiwiSaver is New Zealand’s biggest form of retirement savings, however most people don’t have the time, interest or information required to make the best decisions, which results in a lot of money being lost down the drain, and people losing out when they do get to retirement. We want to help all New Zealander’s make the best possible decisions and get the best advice, which is why our online KiwiSaver advice is free. However, we also realise that many people do still want to talk to an investment adviser to get personalised advice, and we are pleased to be able to help these people get the benefits the online platform can offer such as reduced fees and ease of use, while also having experienced, qualified Authorised Financial Advisers on hand to talk to. We wanted to graft together the best of powerful computing and technology together with a human touch, and Ilumony has allowed us to do that.”
Ilumony is currently in the final countdown to launch, however in the meantime people can pre-register via the website http://www.ilumony.com/
Stock, R. (2016, November 10). Many Kiwis’ ready to embrace ‘Money Robots’, Kiwi Wealth report says. http://i.stuff.co.nz/business/86301534/Many-Kiwis-ready-to-embrace-Money-Robots-Kiwi-Wealth-report-says?cid=app-android
Lyoyd, L & Xu, T. (2016, June 3). Millennial professionals want Robo-advice. Law Talk, 889 p29.
Kocianski, S. (May 2016). The Robo-advising report. BI Intelligence
Disclaimer – Rachel Strevens is an Authorised Financial Adviser (AFA) and Director of Ilumony Ltd, a company providing financial services and advice on KiwiSaver. A copy of her disclosure statement is available free of charge on request from firstname.lastname@example.org Information provided in this article is of a general nature only, and is not intended to be personalised financial advice.