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Robo-advice opens up SMSF opportunity

Robo-advice is expected to have many effects on the SMSF industry, including the opportunity for SMSF advisers to increase business and client numbers.

“I think the economical size of establishing an SMSF is going to fall again,” Mafematica managing director Derek Condell said in a video interview with selfmanagedsuper’s sister publication, financialobserver.

“With the low cost that people will be able to get investment advice and the low cost of physically managing portfolios being reduced by the provision of robo-advice, that means a lower starting point.

“The second thing is that robo-advice is actually going to give advisers more business – we’re going to find a higher percentage of SMSFs going to planners than previously.”

The advent of robo-advice should lead to a fall in investment advice fees, both in terms of upfront and ongoing fees, Condell said.

“This means that financial planners, using these new [robo-advice] techniques, should increase their overall revenue, increase their number of clients and increase the percentage of SMSFs and then the general population that they have as clients,” he said.

He also said he expected unique products to be delivered by providers of robo-advice.

“In superannuation, we know the government and all the major groups are saying that we need new, cheaper product,” he said.

“Well I can assure you there will be new and exciting product that SMSF trustees and planners can build and design themselves and get estimates of outcomes themselves, so I think we’re in for an exciting time.

“There’s no doubt that the big institutions are going to push robo-advice to get a bigger share of the SMSF industry.”

See the Robo-advice video here

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