As we are aware, there is no regulatory rule in Australia that explicitly says that a financial services firm that does not offer ‘personal financial advice’ should not be called a robo advisor. However, we at QuietGrowth are of the view that it is prudent to avoid calling a financial services firm that does not offer ‘personal financial advice’ as a robo advisor, even if that firm provides ‘general financial advice’ digitally.
As per the Australian regulatory authority ASIC, digital advice or robo advice or automated advice is the provision of automated financial advice using algorithms and technology and without the direct involvement of a human adviser.
Reason for our view:
Some industry observers refer to firms offering financial products online (thus, ‘general financial advice’) as robo advisors, even though those firms do not provide ‘personal financial advice’ digitally.
We at QuietGrowth are of the view that calling such firms as robo advisors should be avoided. We notice that customers get confused with the accurate utility of a robo advisor when the term robo advisor is used to describe firms that do not provide ‘personal financial advice’. At a time when many people find it hard to tell the difference between ‘personal financial advice’ and ‘general financial advice’, it is preferable if the term robo advisor is used only for firms that provide ‘personal financial advice’ digitally.
Traditional robo advisor
Some investment platforms and micro-investing platforms attempt to tag themselves as robo advisors even though these firms do not provide personal financial advice digitally. To substantiate their attempts, these firms call the actual robo advisors (that is, those that provide personal financial advice) ‘traditional robo advisors’ while attempting to call themselves ‘robo advisors! This marketing practice is not desirable as it can confuse the clients.
Refer to our Robo advice for your wealth management page for more information.
Also read the answers to the related questions:
- Does a robo adviser give personal financial advice?
- What is the difference between robo advice, digital advice, and automated advice?
- Can a firm that sells investment portfolios online be called a robo-adviser?
Additionally, you can consider to read the following knowledge resource:
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