The Robo Revolution

In the context of a market where investors are moving away from financial advisors and wanting to pay less fees, Alex Gluyas looks at the growing trend of turning to robo advisers as a tool for financial advice and investing.
By · 20 Feb 2020
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20 Feb 2020
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If you asked someone 10 years ago whether they’d entrust their financial investments to a robo adviser, you would probably get a weird look.

Fast-forward to 2020, and now some 30 per cent of adults are willing to trust robo advisers with their hard-earned cash according to research undertaken last year by strategy consulting firm Thinque.

The survey of 1000 adults highlighted the increased scepticism towards financial services professionals after revelations brought to light by the banking royal commission left consumers looking for alternatives.

The other factor at work is that advisers are increasingly finding clients with small balances uneconomic, and won’t deal with them, leaving those people adrift, in need of cost-effective advice.

The growing popularity of robo advisers is reinforced by data released by Statista which estimates that in Australia, they now have US$3.23 billion worth of assets under management.

That number is expected to grow at an annual rate of just over 30 per cent between 2020-2023 along with the number of people using robo advisers according to that same report by Statista.

This isn’t just happening in Australia, which is actually lagging behind the United States, where there’s an estimated US$1.04 trillion assets under management by robo advisers.

So, for those investors intrigued by the robo adviser phenomenon or are tossing up which one to use, below is a rundown of the industry.

What is robo-advice?

The rise of robo advice is all about price – they exist because they offer a low-cost alternative to financial advisors while still providing investors with the benefit of some advice about asset allocation, portfolio construction and tax reporting.

Robo advisers are simply software programs that algorithmically construct asset allocations for investors based on certain risk profiles.

Users of the service will be asked to complete an online questionnaire about their investment time frames and/or how aggressive or conservative they want to be with their investment to decipher which diversified portfolio they are suited to.

Based on responses, the robo adviser will recommend an investment strategy that usually consists of a variety of asset classes such as Australian and international equities, emerging markets, listed property, global infrastructure and bonds/fixed income.

Each portfolio is weighted depending on the risk profile recommended. So, for example, a conservative portfolio would be more heavily dependent on defensive assets such as cash and bonds, while an aggressive portfolio might contain more high-risk assets such as emerging market equities.

Robo advisers create portfolios which commonly contain exchange-traded-funds (ETFs) in the various asset classes, which offer lower operating costs and more flexible trading.

As market fluctuations occur, portfolios are rebalanced in order to maintain the ideal mix of assets to suit the allotted risk profile. 

Companies offering robo advice all differ in some way, including fees, minimum investment amount and performance, so research is often required to decide which company suits your needs, which we’ll delve into later.

Despite the ‘robo advice’ label, human intervention is important in the process given an investment committee usually oversees portfolio construction and there is also a need for real customer service staff to help investors with questions when the need arises. 

What type of investors suit robo-advice?

Entry-level or ‘beginner’ investors are increasingly turning to robo advisers given their low fees, minimum investment amount and ease of use.

First-time investors won’t need to constantly check their portfolio’s performance over the span of its lifecycle, rather, focus can be put on saving income to deposit into the robo adviser in order to benefit from compounding returns over a period of time.

Other investors who might find robo advisers useful are professionals and SMSF trustees who are fee conscious, want to diversify their investments and don’t need sophisticated strategies but instead, wish to have simpler asset allocations.

This also works for investors who are looking to set up automated investment plans for their children or grandchildren’s future education or to help them out with a house deposit down the track.

The behaviour of individual investors is also something to consider when thinking about using robo advisers. For those prone to making decisions out of emotion or instinctively, automating the process makes investors less vulnerable to erratic trades.

Comparing apples with apples

It’s important to consider the asset allocation of each investment portfolio when comparing returns and risk from one product to another.

Most robo advisers use the five Morningstar Multi-Sector Indices for benchmarking which range from Conservative (low-risk) all the way up to Aggressive (high-risk) to compare their funds’ performance to their peers.

These benchmarks are made up by Morningstar to determine daily returns for the five indices by asset allocating towards nine asset classes which are then weighted based on the category’s average asset allocation, as seen below for example.

Sometimes robo advisers do not construct their portfolios similar to the benchmark they are supposed to be tracking and hence, they may outperform or underperform their peers in a given timeframe.

An example of allocating differently to the benchmark would be benchmarking Fund A against the conservative Morningstar Indices, but asset allocating 50 per cent to growth and 50 per cent to income, which would be considered a balanced allocation, not conservative.

This is a key thing to look out for when looking at robo advisers – analysing to what extent their portfolios and therefore asset allocations are in line with their benchmark and if not, understanding the risks associated with those returns and that you may not be comparing apples with apples.

Comparison of robo advisers

As with any investment, it’s important to do your research so below I’ve put together a basic table based on the top four robo advisers in alphabetical order that appear via a Google search.

Below the table, you will find more information on each robo adviser including more detail on asset allocations, fees and performance, which are all important when weighing up which robo adviser to invest money with.


Fees on

$10,000 investment

Fees on

$100,000 investment

Fees on



Minimum Investment

Investment product

Number of investment portfolios


$99p.a ($8.25 per month)













Six Park

$119.40 ($9.95 per month)







$66 ($5.50 per month)






Note: Fees only include what each robo adviser charges and may not include brokerage and fees charged within the ETFs. It is important to read each company’s product disclosure statement.


InvestSMART was founded in 1999, launched its robo adviser services in 2015 and is the first fund manager in Australia to cap its fees. Its Investment Committee is led by Paul Clitheroe AM and Alan Kohler AM. It offers four diversified portfolios ranging from conservative to high growth and 5 asset class-specific portfolios ranging from Interest Income to International.

Selected ETFs

Diversified Portfolios and risk weighting

Conservative: Fixed interest 46.47% | Cash 18.42% | Aus Equities 13.01% | Int. Equities 12.67% | Property and Infrastructure 9.43%

Balanced: Fixed interest 33.31% | Cash 11.58% | Aus Equities 24.07% | Int. Equities 22.27% | Property and Infrastructure 8.77%

Growth: Fixed interest 19.76% | Cash 7.58% | Aus Equities 30.21% | Int. Equities 31.67% | Property and Infrastructure 10.79%

High Growth: Fixed interest 3.81% | Cash 6.03% | Aus Equities 39.84% | Int. Equities 43.56% | Property and Infrastructure 6.76%

InvestSMART Group Limited owns InvestSMART, Eureka Report and Intelligent Investor.


$8.25 per month for investments between $10,000-$18,000 (Capped at $99p.a)

0.55%p.a for investments between $18,001-$81,999

$451p.a capped fee from investments $82,000 and above


QuietGrowth was founded in 2015 by founder and CEO Dilip Sankarreddy. It offers five portfolios ranging from conservative to high growth.

Invests in eight ETFs across six asset classes which include:

Portfolios and weightings

  1. Shares 33%, Bonds 61%, Gold 6%
  2. Shares 53%, Bonds 42%, Gold 5%
  3. Shares 69%, Bonds 27%, Gold 4%
  4. Shares 82%, Bonds 14%, Gold 4%
  5. Shares 91%, Bonds 5%, Gold 4%

Pricing (annual fee)

0% for portfolio value between $3,000-$10,000

0.6% for portfolio value between $10,001- $30,000

0.5% for portfolio value between $30,001-$200,000

0.4% for portfolio value $200,001

Six Park

Six Park was founded in April 2016 by founder and Chairman of the Investment Committee former JP Morgan Australia chairman Brian Watson AO. It offers five portfolios ranging from conservative to high growth.

Selected ETFs

Portfolios and risk weighting

Conservative: Defensive 72.5% | Growth 27.5%

Conservative Balanced: Defensive 60% | Growth 40%

Balanced: Defensive 40% | Growth 60%

Balanced Growth: Defensive 27.5% | Growth 72.5%

Aggressive Growth: Defensive 15% | Growth 85%


$9.95 per month on invested amounts between $10,000-$19,999

0.5%p.a on invested amounts between $20,000-$199,999

0.4%p.a on invested amounts between $200,000-$499,999

0.3%p.a on invested amounts greater than $500,000


Stockspot was founded in 2013 by founder and CEO Chris Brycki, who was formerly a Portfolio Manager at UBS. It offers five portfolios ranging from conservative to high growth.

Selected ETFs

Portfolios and risk weighting

Amethyst portfolio (Conservative): Defensive 65% | Growth 35%

Sapphire portfolio (Moderately conservative): Defensive 56% | Growth 44%

Turquoise portfolio (Balanced): Defensive 50% | Growth 50%

Emerald portfolio (Growth): Defensive 40% | Growth 60%

Topaz portfolio (Aggressive growth): Defensive 31% | Growth 69%


$5.50 per month for account balances $10,000 or less

0.66%p.a for account balances $10,001

0.66%p.a for account balances $50,000

0.528%p.a for account balances $200,000

0.396%p.a for account balances $2,000,000

Wrap up

When looking at robo advisers to invest, fees are particularly important to look at, as even the slightest pricing changes will compound over an investment’s lifecycle, to equate to a significant gain or loss.

As seen above, fees vary between robo advisers based on the account balance, so it’s important to look at how much you are willing to invest, and then figure out which advisor offers the lowest fees for that amount.

Obviously, a firm’s performance is also important however, as the age-old cliché highlights, past performance shouldn’t be used as an indicator for future performance.

When looking at the performance in general, take into context the time period in which the performance is based on and any outliers of years. As a general rule try to compare performance over at least a five-year timeframe if not longer.

As with any investment, it’s important to research and compare robo advisers to find the one that is best suited to your situation, investment amount and timeframe.

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