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White-label robo-advice eyes SMSF portfolios

Automated investment platform BetaSmartz has revealed it has attracted strong interest in its robo-advice platform from major institutions with dealer groups servicing SMSF clients.

“We really are Australia’s first across-the-board platform – we’re not targeted at any one particular sector as our technology can be used across institutional, SMSF and retail,” BetaSmartz founder and chief executive John James told selfmanagedsuper.

“But specifically for SMSFs, I think we’re particularly attractive as an offering because what we’re doing is de-risking portfolios, offering transparency and we’re product agnostic as well.

“We’re giving investors optimised portfolios, but we’re not tied to any one specific provider in terms of the underlying assets.”

James revealed the response from the industry had been pleasing so far.

“We’re in detailed conversations with a couple of the major banks here, particularly with a focus on their dealer groups that cover the SMSF sector,” he said.

“Interest [since we launched] has been really strong from all over Australia, both capital cities and regional.”

Initially, BetaSmartz will focus on its operations as an adviser-branded, white-label offering, but could eventually offer the service to self-directed SMSF trustees.

“We haven’t ruled out direct-to-consumer at some time in the future and there are obviously regulatory issues around this,” James said.

“Because a lot of SMSFs have a large pool of money, there is an opportunity to take on direct clients, but right now our marketing is more adviser-geared.”

He said once a client was onboarded to the platform, it then presented risk-profiling questions, which then generated statements of advice.

“The information is automatically fed into the algorithm, which then looks to [match an outcome] to what the investor’s targets are, such as retirement goals for an SMSF, then we generate optimised portfolios off that using a combination of exchange-traded funds and actively managed funds,” he said.

“The adviser can then sit down with the client and they can see the same screen so there’s no confusion there.

“The adviser can then add constraints to the portfolio – they can have a view on things like stock/bond allocation, regional weightings, for example, they might want more exposure to US equities or the US markets generally.

“This is where the de-risking comes in for the adviser and the client – they can take their view, but we’ll also be, in real time, optimising against that.”

He said this was unique in Australia.

“This is true robo-advice or automated investing in the global sense of the term,” he said.

“In Australia, there are other robo-advisers in the market, but they typically are only risk profiling and putting people into model portfolios in the way that paraplanners used to do.

“Robo-platforms in the United States have seen substantial inflows from the higher end in terms of wealth – they’re going in, they’re clearly defining what their goals are, they can create optimised portfolios that typically they would be paying a lot of money for with a fund manager.

“We’re democratising that technology and sophistication for investors, but it also applies to anyone who wants to look at transparent cost structures.”

BetaSmartz launched its white-label, robo-advice solution earlier this month. It is applicable across the retail, institutional and SMSF space.

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