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Robo advice FAQs - the everyday person’s guide to robo advice

From virtual chatbots which streamline customer service and support to computer generated investment advice Australians are increasingly interacting with robots in the day-to-day management of our money.

Robo advice is an area that’s been gaining a lot of traction in recent years as AI (Artificial Intelligence) technologies develop and new FinTech companies disrupt the banking and investment sector.  

So what is robo advice exactly and what do you need to know about using a robo advisor for your investments? In this guide we’ll run you through the basics of what you need to know about robo advice, where you can get it, and whether you should add a robo advisor to your investment mix. 

Investing then and now

In decades gone by, investing was a pretty complicated ordeal for the average person. Not only did you have to diligently stash up your savings for months or years, but then you also needed to seek out the help from a financial advisor or stockbroker to make investments on your behalf.

Now, things have changed and everyday investors also have the option to opt for more self-service options like online share trading where you can directly invest in the sharemarket or add a robo advisor to your investment portfolio.     

What is robo advice?

Robo advice is financial advice that relies upon algorithms and digital technology - rather than use a finance professional’s experience and skill - to formulate advice on how to best invest your money.

This kind of advice is a digital service and for that reason, is delivered and managed through online channels like your smartphone, tablet, mobile or desktop computer. 

Who offers robo advice?

Don’t expect to interact with your own personal R2-D2 when seeking out robo advice (yet!). Instead, this kind of automated advice is offered by a range of online providers including FinTech start ups, banks and even superannuation funds.

The good news is that, in order to give out this kind of financial advice and information, robo advisors, like traditional financial advisors, must have an Australian Financial Services Licence which are only handed out by Australia’s chief corporate regulator, ASIC.

While these are just some of the robo advisors that are currently available on the Australian market, it is an area of rapid growth with more and more companies entering the market each year.

If you are just starting out on your robo advice journey it is really important that you do your due diligence on any company and make sure that the business you’re looking into using for your financial advice is an Australian Financial Service licensee. With any kind of investment there are risks and no guarantee of returns. 

What are the benefits of robo advice?

Robo advisors offer a load of benefits for Aussies looking to invest their money savvily over the long term. Some of them include:

Low cost

One of the biggest benefits of robo advice is that compared with traditional investment advice, robo advice is generally cheaper. Traditional financial advisors are costly, whether it be for the initial consultation, or in the continuing management of your investments. In contrast, the majority of robo advisors are online-only companies which means they save on the expensive overheads, and without ongoing human involvement, can keep the costs to the investor low.

Easy access

The low cost around robo advice knocks down one of the major barriers to getting financial advice, but the fact that you can access advice simply by visiting a website or downloading an app and answering a few questions, really seals the deal. Gone are the days where you had to make an appointment and follow it up with a physical visit to your financial advisor, now simply whip out your smartphone and you’re on the way to owning your own snazzy investment portfolio.

Minimal management

Not only won’t you need any insider knowledge, robo advisors also require minimal ongoing management which means you won’t have to pour a whole lot of time into your investments.


Unlike when you go to a human for investment advice, robo advisors are super consistent with their recommendations. Your advice comes from concrete, uniform algorithms rather than the experience and biases of a human advisor.

Who is it good for?

Robo advice is a popular option for Aussies who don’t want or have the money to pay pricey consultation and investment fees charged by traditional financial planners and advisors.

Aside from that, it is also an option if you already manage a lot of your finances digitally and are comfortable in dealing with online platforms for your money matters.

The final thing to consider before deciding whether or not this is the right type of service for you is the complexity of your current financial situation. While robo advice might be convenient and a lot cheaper than traditional financial advice, the algorithms can only generate advice on the information you present. So if your situation is a little more complicated or you’re not quite clear on your investment objectives, maybe you’re better off saving up a little more of your cash and getting your financial advice through more conventional avenues. 

What can a robot advise me on?

Robo advisors help you sort out where to put your money so that it works best for you over the long run. Depending on the robo advisor, you might get robo advice for: 

Choosing a superfund

If you are reviewing your superfund or getting your first superfund there is robo advice available, from helping maximise your super contributions to offering strategies to make your retirement nest egg grow as quickly as possible. The recommendations the advisor makes will be dependent on your unique situation.

For anyone who is considering a self managed super fund (SMSF) robo advisors have also made incursions into the world of self managed superannuation funds and can provide recommendations on where to put your money. It is important to remember that there are strict rules surrounding what you can do with your super so be sure that you consider all the risks before acting on any advice.


Creating a kickass investment portfolio, superannuation aside, is one of the main areas where robo advisors work their digital magic.

Based on the personal details and data you enter, robo advisors can suggest a recommended portfolio of investments and these generally consist of a range of funds including Exchange Traded Funds (ETFs) and managed funds. The important thing to remember is that each robo investment company is different and so are the investments they will be making on your behalf.

No matter what your investment portfolio consists of you’re going need to sign a managed discretionary account (MDA) agreement which basically gives the robo advisor freedom to complete trades on your behalf, adjusting your mix of assets so that your investment portfolio stays on track with your financial goals. 

How do I pay for robo advice?

One of the key drivers behind robo investment technology’s recent popularity is the cost compared with seeking out traditional investment advice. How you pay for robo advice, however, depends pretty heavily on the company you’re dealing with and what type of advice you’re seeking.

Some of the payment options include:

Fee for service payments

One of the ways you might be asked to pay for robo advice is on a fee for service basis, which is pretty popular in the financial services industry. What that basically means is that all of the fees are clearly unpacked for you, so that you understand what you’re paying for. The overall costs may be broken into the fee for the advice versus the investment costs.

Percentage based payments

Another payment type is a percentage fee which would represents a small slice of the value of the investment. This type of payment extends beyond the initial point in which you seek out advice, as your investment requires some level of ongoing management.

Subscription based payments

If you’ve got a Netflix or Spotify account you’re probably most familiar with this type of payment. Basically, you pay your robo advisor on a monthly, quarterly or annual basis for the ongoing management of your investment portfolio or simply to keep you in the loop via updates or newsletters.

No matter which payment type your robo advisor employs, you’ll be completely clued in through the financial services guide (FSG) and statement of advice (SOA) that will be presented before the advisor clicks into investing mode. These two documents are legally required to be issued when you seek out financial advice and will give you the rundown of what that advice recommends as well as the initial and ongoing costs of your investment, so be sure that you read these COVER to COVER.

How do I sign up for robo advice?

Much like the payment process, each robo advice provider will have subtle differences and requirements. Check out our infographic below which outlines the general process. 


What should I be aware of before applying?

Convinced that robo advice is the perfect solution to help you achieve your fancy financial goals? Great, but hold your horses for one second! With any financial decision, you should really consider all of the factors - including the potential drawbacks of any investment decisions.

So here are the things to be aware of:

Robo advice won’t correct human errors

Robo advice algorithms might be watertight but the rest of us definitely aren’t. So make sure you fill in the questionnaires and enter your personal details with great care, double checking you’ve plugged all the right facts and figures into the site. The advice will only be as accurate as the data you enter!

Robo advice doesn’t take into account your whole financial picture

While most robo advice questionnaires are pretty thorough, you should keep in mind that they usually don’t take into account any debt you may have or loans you’re still paying off. Generally speaking, these advisors will take into account your assets and income, the positives really, so make sure you’re aware that the advice you’re getting isn’t necessarily taking into account that personal loan, mortgage or credit card debt that you’re still paying down.

Even robots need updating

Robots seem like little omniscient beings, but they aren’t. If something is to change in your personal finance situation, whether you pick up some extra cash or suffer a loss of income (ouch), you need to keep your new finance friend in the loop - especially if you think it will impact your investment goals.

Portfolio rebalancing 101

Depending on your specific advice, you may have given your robo advisor the autonomy to make small changes to your asset and fund makeup so that keep you on track to hit your investment goals. While this is generally a good thing, you should still asked to be notified when these alterations are made and why. Sometimes this will be done at a set time, say quarterly, or after your investment strays too far from its original goal. This is important to know as some robo advisors might charge you for rebalancing your portfolio and you don’t want any unexpected bills dropping into your inbox.

How are robo advice complaints handled?

If you’re unhappy with a human advisor, the initial point of contact to get your complaint resolved is pretty obvious. But with robo advisors you’ll most likely be dealing with an online process for complaints and customer service enquiries. All advisors will have a complaints procedure. If you do lodge a complaint and you’re not satisfied with the response, you can lodge a dispute with the Financial Ombudsman Service.

Ben Tosi
Ben Tosi