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.
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.
Finder survey: What do Australians from different states use to invest in the stock market?
Response
WA
VIC
SA
QLD
NSW
An online broker or share trading platform
24.79%
25.26%
13.92%
26.46%
25.19%
Micro-investment app
4.27%
2.46%
1.27%
2.24%
2.31%
Full-service stock broker
0.85%
2.11%
2.53%
3.59%
1.03%
Robo-advisor
0.85%
0.7%
1.27%
0.9%
0.77%
Managed fund
1.05%
2.53%
2.69%
3.34%
Other
0.35%
2.24%
2.06%
Source: Finder survey by Pure Profile of 1145 Australians, December 2023 Data for ACT, NT, TAS not shown due to insufficient sample size. Some other states may also be excluded for this reason.
Robo-advisors in Australia
Spaceship Voyager is an investment app that offers 2 different diversified portfolios to choose from: Spaceship Index Portfolio or Spaceship Universe Portfolio. The Spaceship Index Portfolio invests in 200 Australian and global companies, while the Universe Portfolio invests in 100 handpicked global companies. Both portfolios have a strong focus on technology growth companies.
There are no management fees when you invest below $5,000. Investments over this amount are 0.05% p.a. for the Spaceship Index Portfolio and 0.10% p.a. for the Universe Portfolio.
Stockspot manages thousands of clients, having launched in 2013 as the first provider of robo-investment services in Australia. It gives you the opportunity to choose 1 of 5 investment strategies suited to your level of risk tolerance, with funds invested in low-fee exchange traded funds (ETFs) across 5 asset classes: Australian shares, global shares, emerging markets, bonds and gold.
If the account balance is under $10,000, fees for the first 6 months are $0 and $5.50 per month after that, (children's portfolios remain free if the balance is under $10,000). Balances over $10,000 incur fees ranging from 0.60 – 0.36% per year. There are no additional brokerage or administration fees and balances over $50,000 receive access to "themes", which allow clients to select additional ETFs at no extra cost.
Although its robo-advice service was launched in July 2015, InvestSMART has been offering investment advice to Australians since 1999. Once you’ve entered your investment time frame, appetite for risk and current assets, the robo-advice service provides a financial health check and recommended investment strategy.
There are 10 investment strategies available and InvestSMART’s fees range from 0.67% to 0.97% a year, depending on the amount you invest.
Launched in August 2015, QuietGrowth is an automated online investment management provider. With a minimum account balance of $2,000, QuietGrowth can manage investments in individual, joint, SMSF and trust accounts.
Fees start from 0.4% p.a. of the balance you invest, but the first $10,000 you invest is free. You can choose from 5 investment portfolios based on your appetite for risk.
Launched in January 2016 under the name Acorns Australia before rebranding to Raiz Invest, Raiz is the local arm of a US parent company that has offered robo-advice to more than 1 million US investors. It offers something a little different to most other robo-advisors by allowing you to link your bank accounts and credit cards to your Raiz account and then investing the spare change from your daily purchases.
You can set aside a recurring investment amount daily, monthly or weekly, or even invest a lump sum with the help of the Raiz app. Your money can be invested in a choice of 6 diversified portfolios based on your risk tolerance, with fees from $1.25 per month (for accounts under $5,000) or 0.275% p.a. (for accounts over $5,000).
Macquarie Group’s OwnersAdvisory platform lets you access more than 30,000 investment choices in Australia and around the world. Customers can use the online platform to buy tailored investment advice that covers local and international shares, ETFs and managed funds. A $55 fee applies per Statement of Advice, while there’s also a $45 monthly subscription fee.
However, OwnersAdvisory merely offers financial advice and does not execute any investments. You can then take the advice you receive and invest your money through your choice of online trading platform.
Clover aims to make it as simple as possible to build wealth and save money in the process. Founded in 2015, it can help you invest in a diversified portfolio of ETFs based on your personalised risk assessment.
Your portfolio can also be regularly re-balanced to ensure that you are on track to reach your financial goals. Clover had not fully launched at the time of writing, so limited information is available concerning the provider’s investment strategies and fees.
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.
Kylie Purcell is the senior investments editor and analyst at Finder. She has completed a Certificate of Securities and Managed Investments (RG146) and specialises in investment products including online brokers, robo-advisors, stocks and ETFs.
With competitive brokerage fees, automated investment advice and seven diversified ETF portfolios, InvestSMART’s robo advice platform is well worth a look.
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Please profile all the Australian robo advisers. These are missing.
Earnie
SixPark
I am thinking about investing and I am unable to find information on
– assets under management
– simple fee calculation
Can you feature these on finder please? for the fee calculation you can use $25,000 as an example amount.
Hi Emma,
Thanks for your feedback!
We are working on profiles for Earnie and Sixpark, please watch this space :)