Scott Morrison's G20 robo-advice superannuation pledge

The Federal Treasurer, Scott Morrison, is spearheading efforts to make Australia a global leader in the provision of robo-advice services to self-directed investors, particularly across the superannuation system, to help people engage and prepare more fully for retirement.

Addressing a G20 conference in Wiesbaden, Germany, on digitising finance, financial inclusion and financial literacy, Treasurer Morrison said consumers' preferences were changing and the demand for sophisticated robo-advice platforms that provide them with tools and information to help them build and better manage their assets was increasing exponentially.

“We must ensure that our policies and actions harness and realise the full potential of FinTech (financial technology) by removing barriers to these innovations and encouraging our citizens and businesses to embrace new financial products and services, while maintaining acceptable risk levels to ensure that confidence in our financial system is retained,” he said.

“One of the prime examples is robo-advice, which has the potential to offer financial advice to a wider cross‑section of the community. In Australia, businesses are beginning to integrate robo-advice into the retirement savings system to help people engage and prepare more fully for retirement.”

InvestSMART Group Managing Director, Ron Hodge, welcomed the Treasurer's comments, pointing out that they gave added credence to the company's long-term focus on providing Australian investors with a best-of-breed robo-advice service that facilitates active portfolio management.

“Treasurer Morrison has hit the nail on the head in pointing out that robo-advice is really the future of financial advice, and I'm delighted that he has committed on behalf of the Turnbull Government to initiate reforms that will accelerate the financial technology revolution across Australia.

“InvestSMART launched the first version of its robo-advice platform back in 1999, and we are now Australia's largest provider of automated investment advice to retail clients and self-managed super funds.

“We provide a free portfolio management tool that allows investors to input their investment data and obtain a financial health score, and also provide them with real-time data, financial analysis and educational content so they are well-placed to make more-informed investment decisions."

Advances in online financial technology is one of the reasons behind the strong growth in self-managed investor inflows into Separately Managed Account products, with investors now able to easily roll over their superannuation funds into SMAs online. SMAs are proving very attractive because of their flexibility, transparency and tax advantages, their low investment entry point, and their overall cost effectiveness compared with other products such as managed funds.

Treasurer Morrison said robo-advice offered consumers and businesses the chance to benefit from new services and products, and provide greater choice through increased competition and efficiency across all areas of the financial system.

“The automation of services can result in lower costs and an increase in people using a particular service,” he added.

Another area broached by the Treasurer was the sharing of financial data, with a recent Government inquiry highlighting the enormous untapped potential of Australia's data and areas that required reform.

Flagged reforms include giving customers more control over data, and opening access to anonymous government-held data to capture benefits.

“Australia's Productivity Commission recently noted it's important that new technologies do not become a victim of fear,” Treasurer Morrison added. “Yes, there are undeniable risks in enabling data to become more widely available. But the risk of harm needs to be assessed based on the likelihood and the scale of potential damage.

“After that happens, risk assessment and mitigation processes should be put in place for the release and sharing of data, as well as collection and storage.

“The Australian Government is a firm believer in the benefits of innovation overall and the potential of FinTech in the financial system.

“We see the talent that's out there, and we know that supporting this industry to grow and thrive is of critical importance.

“It is important that all of us work together, across borders, to help build this industry so that it can deliver for consumers, for businesses and for our respective economies.”

Mr Hodge said that Australia was at the forefront of automated investment advice technologies, and the strong uptake by retail investors, SMSF trustees and professionals including financial planners was indicative that robo-advice is gaining good traction.

“With greater uptake by investors we will continue to invest heavily in our technology, which can only improve these types of services and outcomes for all Australians.”