Consumers might favour algorithms over fallible humans

It is likely that the Financial Advisers Act review will clear the way for automated advice in New Zealand. It is believed a number of people are already developing roboadvice tools, including one industry figure who has been developing a platform for a couple of years.

The CFA Society has released a member survey which found 70% of respondents expected “mass affluent” investors would be positively affected by automated financial advice. They would have fewer costs and better access to advice and products, the survey said.

Jeff Stangl, president of the CFA society in New Zealand and a Massey University academic, said roboadvice had the potential to be disruptive for New Zealand financial advisers. “Initially at the lower end of the market, smaller investors.”

He said many financial advisers could find the core of their client base was tempted over to roboadvice.  “If you have over $50,000 in accumulated wealth you are a good target for smaller financial planners.  Some of the bread and butter of smaller-scale financial advisers will be subjected to disruption as [roboadvice] is rolled out. It’s a conundrum.”