The Financial Markets Authority is consulting on the draft exemption notice and wants information on aspects of it, including the draft information sheet, application documents, good character declaration and application guide.

But law firm Russell McVeagh said New Zealand was playing catch-up to the rest of the world.

As at October 2017, digital advisers had $224 billion in assets under management, and this is estimated to grow to over $2 trillion by 2020.

Senior Associate Joanna Khoo said: "The two main barriers for customers currently obtaining financial advice under the traditional human adviser model are the cost of financial advice and the minimum amount of investable assets typically required. Globally, the rise of digital advice has been a significant step toward reducing this advice gap by generating a low-cost solution suitable to a broad range of customers.

"While digital advice is already well developed in the US, UK, Australia, Singapore and Europe, New Zealand has been slow off the blocks. At about the time the Financial Advisers' Act 2008 (FAA) came into force here, firms in the US were already launching their first digital advice platforms."

Recent reports on digital advice platforms show the average financial planner has a minimum investment between the range of $10,000 and $50,000, while minimum investment amounts for digital advisers start as low as $500.

Most digital advisers charge fees ranging from 0.02% to 1% of assets under management.

Providers planning to develop robo platforms would need to consider the commercial viability of the prospect, Russell McVeagh said.

"Given that digital advisers, on average, charge a much lower fee to investors, providers looking to invest in developing or acquiring a platform will need sufficient scale of service uptake to make such investment worthwhile.

"As such, the exemption seems to favour providers with a large-scale client base (such as providers of KiwiSaver, or large retail funds). Despite these barriers to entry, overseas jurisdictions have shown that there is a role in the market for smaller players to innovate and develop new platforms that may be used by larger financial service providers."

Providers will now need to apply to the FMA to rely on the exemption and provide good character declarations, among other information.

That will involve ongoing disclosure obligations,  conduct obligations and record-keeping requirements in line with those required of authorised financial advisers.

Russell McVeagh said the effect of the application requirement is to create a quasi-licencing process similar to the licensing regime under the FMCA. "Providers should therefore factor in sufficient time for the application process in their launch strategy."

Head of Russell McVeagh's corporate advisory group Dan Jones said the exemption was a necessary first step in putting the New Zealand financial advice regime on equal footing with overseas regimes, and may provide particular assistance to New Zealanders in KiwiSaver.

"A small number of providers have indicated readiness to launch digital advice solutions under the exemption, yet the timing and infrastructure costs could mean that enthusiasm is limited," he said.