Welcome back to Industry Shifters.

Today we are exploring the fruitful world of financial advice.

Will robotic financial advisors replace human ones?

Let’s find out!

Brought to you by Dead Pig Publishing

As an investor, you’ll spend at least 700 hours of your life looking at your portfolio.

Spend 4 learning how to do it well.

• Permanently change how you view investing and stock portfolios, and learn how to approach the stock market with true confidence.

• Learn how investment professionals build a portfolio, understand its direction, and evaluate how it has performed.

Check out now!

Robo Advisors

Robo-advisors in Australia have emerged as a popular, tech-driven solution to simplify investment management, especially appealing to individuals seeking lower fees and automated services. 

These platforms use algorithms and advanced analytics to build and manage investment portfolios based on a client's risk tolerance and financial goals, often with human advisors available for support when needed. 

As they grow in popularity, robo-advisors are democratising access to sophisticated investment services, particularly for young investors and those new to investing who prefer a digital, low-cost, and user-friendly experience.

Potential Impact

The market size of the financial planning and investment advice industry in Australia was $5.5 billion AUD as of 2023.

Provided robo advisors continues to grow in popularity and are effective investment managers:

In a low growth scenario, where robo advisors only come to account for 5% of this industry over the next five years, the market for robotic financial advice would be worth about $275 million AUD by 2030.

In a high growth scenario, where robo advisors come to account for 25% of this industry over the next five years, the market for robotic financial advice could be worth as much as $1.375 billion AUD by 2030.

Why this WILL be disruptive:

• Cost-Effectiveness: Robo-advisors offer significantly lower fees compared to traditional financial advisors, making professional investment management accessible to a wider range of Australians, particularly younger investors or those with smaller portfolios. They also have lower minimum investment amounts, which helps democratise financial services by allowing more people to access sophisticated strategies that were once reserved for high-net-worth individuals.

• Convenience, Automation, and Scalability: Robo-advisors provide 24/7 accessibility and automated portfolio management, allowing for efficient, self-service investment management. They can handle a large number of clients simultaneously through algorithms and artificial intelligence, making them highly scalable and able to offer personalised advice to many individuals at once.

• Addressing Advisor Shortage: With the number of human financial advisors declining in Australia, robo-advisors can help fill the gap by providing a scalable solution to meet the growing demand for financial advice, especially among younger investors and those in regional areas who might otherwise lack access to traditional advisory services.

Why this WON’T be disruptive:

• Lack of Human Touch and Emotional Support: Robo-advisors cannot provide the personalised advice or emotional intelligence that human advisors offer. For complex financial situations, such as estate planning, tax optimization, or managing significant life events, many clients still prefer the expertise, trust, and emotional support that come from a personal advisor.

• Limited Scope of Advice: While robo-advisors excel at investment management, they often lack the ability to offer comprehensive financial planning. Services such as estate planning, tax strategies, and insurance are typically beyond the scope of automated platforms, which may be a limitation for clients with more complex needs.

• Consumer Trust and Adoption: Building trust is a significant hurdle for robo-advisors, particularly when it comes to handling sensitive financial information. Some investors, especially those who are less tech-savvy or have high-net-worth, may be reluctant to trust an automated platform with their financial futures.