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Robo-advice to benefit SMSF value chain

Robo-advice’s ability to deliver detailed retirement income estimates would not only be a meaningful tool for SMSF advisers, but could also benefit accountants and administrators in the sector.

Mafematica managing director Derek Condell said currently there was no simple tool that answered the questions Australians were asking regarding their future economic well-being.

“How much money will their savings provide, how long will their retirement income last, what are the various chances of the future income plan being met?” Condell told selfmanagedsuper.

“There’s also no simple tool available that answers what changes people should make today, such as securities to own, or asset allocation, and how can we do that without the need for personal risk profiling or giving away personal information such as salary.

“This is the sort of thing that we can do for the SMSF trustee, but this is not available anywhere.”

Robo-advice enabled advisers to model what clients could do now to get an expected income in retirement, he said.

“We’re modelling for [the present],” he said, adding that robo-advice delivered fast, detailed retirement income estimates at a low cost, based on age or years to retirement.

“Mafematica uses a highly sophisticated mathematics tool to use current investments and savings plans to deliver the actuarial probability of achieving future payments of income and capital.

“It minimises analysts’ judgment about how securities will perform, replacing this with scientific numbers.”

While the modelling benefits of robo-advice were apparent for SMSF financial planners, accountants and administrators could also find value in implementing or offering it, he said.

“For the licensed SMSF accountant, this creates a conversation because they can run the model and say to their client, assuming the client is better off having an adviser, to achieve this income outcome, we’ve put you into more international equities,” he said.

“The accountant can have a really intelligent, in-depth conversation with their client.”

He revealed he was receiving interest from administrators as they were searching for other ways to earn revenue.

“Why wouldn’t an administrator offer robo-advice on their website and get a distribution fee?” he said.

“The administration would also look better in the eyes of the client and the adviser or accountant.”

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