Investors should not blindly accept robo advice outcomes
Too many online investment management tools ignore the education piece, expecting investors to blindly accept the robo-advice outcomes.
Excessive focus on the end product and lack of a broader educational component are all issues that can limit the value of robo-advice for self-directed investors– or at the very least mean it should be taken with a significant health warning.
To address this situation, InvestSMART today launched its free next generation robo-advice solution. It steps beyond the limits of earlier technology by ensuring investor’s current assets are included in any asset allocation calculation.
“InvestSMART’s new solution is a more holistic approach that takes into account the full breadth of an investor’s current portfolio, including shares, managed funds and property. It includes a comprehensive portfolio health check which compares each investor’s existing portfolio of investments with an expert’s benchmark portfolio of investments to identify gaps in diversification.”
In a world first, InvestSMART’s robo-advice tool allows investors to simulate changes in their portfolio to move closer to an optimal allocation of investments in order to reach a desired level of diversification. Many existing robo-advice models simply direct investors to risk-profile ‘matched’ portfolios, without taking into account the investments they already have, both outside and within super. Unfortunately, the result of this narrow approach could lead to seriously adverse outcomes for investors.
“We have a strongly held view that robo-advice should not be about selling investment products, but rather be an holistic investment management tool that educates investors so they can take control of their own financial destiny and improve their own financial outcomes,” Mr Hodge explained.
Helping Australians make informed decisions about their financial future should be at the heart of any online investment planning tools. The rapid advances in technology are allowing more investors than ever before to take control of their financial destinies.
Click here to try out our robo-advice
Frequently Asked Questions about this Article…
Robo-advice refers to automated investment planning tools that offer accessible and low-cost solutions for everyday investors. These tools can help investors manage their portfolios by providing tailored advice based on their financial goals and current assets.
Investors should be cautious because many robo-advice tools focus too much on the end product without providing the necessary educational component. This can lead to investors accepting advice without fully understanding the implications, potentially resulting in adverse financial outcomes.
InvestSMART's new solution offers a more holistic approach by considering an investor's entire portfolio, including shares, managed funds, and property. It provides a comprehensive portfolio health check and allows investors to simulate changes to achieve optimal diversification.
Including current assets in robo-advice calculations is crucial because it ensures that the advice is tailored to the investor's existing financial situation. This helps in creating a more accurate and effective investment strategy that aligns with their goals.
InvestSMART's tool helps with portfolio diversification by comparing an investor's existing portfolio with an expert's benchmark portfolio. It identifies gaps in diversification and allows investors to simulate changes to move closer to an optimal allocation of investments.
Education is important because it empowers investors to understand the advice they receive and make informed decisions about their financial future. A well-informed investor is better equipped to take control of their financial destiny and improve their financial outcomes.
While robo-advice tools offer many benefits, they should not be seen as a complete replacement for traditional financial advisors. These tools can complement traditional advice by providing accessible and low-cost solutions, but they may lack the personalized touch and expertise that a human advisor can offer.
Investors interested in trying out InvestSMART's new robo-advice tool can do so by visiting their website and accessing the tool online. This allows them to explore the features and benefits of the solution firsthand.
Call 1300 880 160
Start a chat
Schedule a call
