Regulatory changes that paved the way for robo advice in Australia

Regulatory changes that paved the way for robo advice in Australia

In Australia, the regulatory authority has played an important role for the emergence of digital advice (also known as ‘robo-advice’ or ‘automated advice’). In 2016, the regulatory authority Australian Securities & Investments Commission (ASIC) released the Regulatory Guide ‘RG 255 Providing digital financial product advice to retail clients’ (link). ASIC also maintains a dedicated webpage for digital advice (link). MoneySmart, an educational portal maintained by ASIC, also has a dedicated webpage for robo advice (link). These measures convey that ASIC is enthusiastic about robo advice, and have paved the way for lesser ambiguity in imparting digital advice by financial advisory firms.

Why are the regulatory authorities enthusiastic about robo advice? We opine that this is because high-quality robo-advice firms such as QuietGrowth are expected to cater to a large swathe of this unadvised segment of Australian adults. (This is in addition to the clients who are switching from their existing traditional financial adviser to firms such as QuietGrowth.)

A bit of data for you to check out. 86.6% of Australian adults do not have a financial adviser, as per the ‘Investment Trends Direct Client Report’, based on a survey of 10,367 Australian adults concluded in late 2015. According to the report, out of 18 million Australian adults, only 2.4 million are actively using a financial adviser. This leaves 15.6 million or 86.6% of Australian adults without availing the services of a financial adviser.

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