WILL ROBO-ADVICE EVER CONQUER THE HUMAN RACE?

An increasingly used term in the financial planning sector is ‘robo-advice’. More specifically, it is computer-generated advice which involves visiting a website where you complete a series of questions regarding your finances, goals and attitude to risk. A computer algorithm then generates advice. But can robo-advice ever compete with the human kind? In this article, we examine its pros and cons.

What robo-advice programs do well.

• Calculating how much money you need upon retirement.

• Establishing the kinds of financial risks with which you are most comfortable.

• Recommending and maintaining investment portfolios.

Where robo-advice falters.

Despite huge advances in automated financial planning programs, only a human can actually display empathy or emotion. A computer program can have no true grasp of your goals, cannot offer recommendations that cater to non-financial needs, and are incapable of constructing complex strategies for anyone who does not fall into their rigid program categories. For this same reason, these programs cannot advise you about whether your life insurance should be owned by you, your business or your SMSF, or how to integrate your super fund, family trust and other financial structures.

In short, while robo-advice has its place, for a comprehensive financial plan there is no substitute for the human touch.