Despite sluggish overall growth reported in the National Accounts, a range of more partial indicators suggest the Australian economy is enjoying reasonable – though not robust – growth from a diversified range of sources. Continued moderate growth and low inflation appear the most likely outcome over the coming year, which would be consistent with steady local interest rates and a focus on income over growth opportunities in the Australian equity market.
This is a common question asked by many young people who have just started their journey to save for their future. If you have this question, then I am glad that you intend to invest for the long term. I am also glad that you are open to seeking the help of an expert to help you make your investments.
However, if you are considering to take the help of a high-quality financial adviser providing you the service face-to-face, then, unfortunately, the amount of investible assets that you have is not sufficient.
Contrary to the hopes of both the Reserve Bank of Australia and the Federal Treasury, economic growth is off to a bad start in 2017 so far. Importantly, however, the recent Federal Budget included new powers for the Australian Prudential Regulation Authority to impose geographic-based lending restrictions. If used, these new restrictions could allow scope for the Reserve Bank to further support the economy through lower interest rates later this year if need be, with less risk of further inflaming the already hot Sydney property market.
Factoring-in the downside risk is an essential part of portfolio construction and investment management, and I am sure that credible robo-advisors deal with this.
As a client, if you are worried about the downside risk of your portfolio, then may be that portfolio is too risky for you. May be, your risk tolerance level is much lower, and you would need to opt for a less risky portfolio.
The next time the market crashes, people who would have previously burnt their hands while investing in individual stocks or in not-so-highly-diversified portfolios, will migrate to a highly-diversified portfolio managed by a low-cost automated investment service.
Typically, people assume that they know more about the markets than others. People assume that they can time the market.
In the coming years, the automated investment management industry will become very advanced technologically. For example, artificial intelligence will be applied to investment management service. Only those independent firms that can understand technology better (like our firm QuietGrowth) will be better placed to provide a superior service in the coming years.
The ultimate goal of an automated investing service should be what is also the actual expectation of a typical customer.
The ultimate goal of an automated investment management service is to provide the best long-term, risk-optimized returns to the client net-of-fees. This is what a typical client wants —What is the return that I am going to enjoy in the long term for a specific portfolio risk that I am willing to take?
You seem to want to have an investment exposure to fintech.
Even though financial service companies have been developing/adopting technologies at least for last couple of decades, fintech as a distinct and more visible space has been emerging strong only since last few years. So there are very few fintech companies that are public.
Robo-advisors / automated investment managers (AIMs) will make things hard for financial advisors with mediocre skills, and some jobs in this segments will be lost. However, financial advisors with superlative skills will survive (and may thrive) as they start to focus more on providing financial advisory services that are not provided by AIMs.
Yes, in the medium-term (around next six years) in each market, there will be an oligopoly in the robo-advisor / automated investment manager (AIM) industry.
AIMs should be prepared for the long haul to generate profits. It is being discussed that an automated investment firm in the US should have at least US$30 billion under management to become cash-flow positive (assuming no further investment in new product development, and with most of the R&D spend going towards the maintenance of the existing product).