Robo-advice 2023: Compare Australian robo-advisors
Which robo-advisor is the best option to manage your investments?
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Getting financial advice can be expensive, meaning many miss out. That's where robo-advice comes in.
Robo-advisors are digital financial advisers that use modern technology to offer low-cost investment management services. In this guide, we explain how these platforms work and how you can compare their services.
What is robo-advice?
A robo-advisor is an online platform or app that provides the same services as a traditional financial adviser. Using a mix of algorithms and analysis from experts working behind the scenes, these digital advisers create financial plans for customers and automatically manage their investments.
The investment portfolio you receive is based on your financial goals, investment time frame and appetite for risk. Once your money is invested, the robo-advisor manages your portfolio and re-balances it whenever necessary to ensure it remains in line with your risk tolerance levels.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
What are the benefits of using a robo-advisor?
At about one-tenth of the cost, robo-advisors are much cheaper than having a traditional financial adviser actively manage your investments. This makes financial advice accessible to all Australians.
The other advantage of using a robo-advisor instead of making decisions yourself is that it removes emotion from investing, which can often lead you to make the wrong decisions.
For the 80% of the population who either cannot afford or are unwilling to pay the fees to receive traditional financial advice, robo-advisors offer a convenient and affordable alternative.
Robo-advisors in Australia
Limitations of robo-advice
Robo-advice for the most part can help investors, especially those who are starting out. But like all things, it comes with some limitations:
- Robo-advisors lack the flexibility that other services can provide. You can't buy individual shares for example through robo-advice.
- They aren't personalised.
- Most robo-advisors are pretty limited with the services they offer. They can't help you with tax or estate planning.
How do I sign up to a robo-advice service?
Although the exact sign-up process differs between robo-advisors, you will generally need to follow these steps:
- Provide your name, contact details and proof of identity.
- Complete a questionnaire regarding your investment time frame and your tolerance for withstanding market fluctuations.
- The robo-advisor generates a recommended investment portfolio. This is often accompanied by a Statement of Advice, which is required by Australian law if you are being given personal advice.
- If you’re happy with the investment portfolio, you can opt to proceed with the recommended strategy.
- Provide your bank account details to fund the investment.
- The robo-advisor invests your money in the chosen portfolio.
- The robo-advisor monitors your portfolio and makes adjustments when necessary to make sure it satisfies your tolerance for risk.
Robo-advice is changing the face of wealth management around the world and could offer a more affordable way for you to look after your investments. However, make sure you compare the benefits and features of a number of robo-advisors before choosing the right service for you.
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