The New World of Financial Advice

Nearly 10 years ago, a small US company began the not-so-easy task of shaking up the world of financial advice. Against a backdrop of the global financial crisis and actively managed funds beginning to struggle to meet investors expectations, the rise in what is now termed ‘robo-advice’, began. That company was Betterment and as of 2017, it has grown to the point that it now has over $10 billion of assets under management.

Initially, the purpose of robo-advisors was to simply rebalance assets for investors and Betterment’s early goal was to simply make it easier for investors to manage their passive investments. Since then the industry has grown significantly as has the technology investors have access to.

Not so long ago the only way to get exposure to a diversified portfolio of stocks was through a broker or a financial advisor who charged commissions in the region of 1-2% per year. As technology improved along with market access, those kinds of costs became unsustainable and investors demanded more for what were effectively passive investments.

Since the launch of Betterment, the number of robo-advisors has grown significantly, as has the functionality. Robo-advisors now have the ability to allocate and rebalance your portfolio based on their proprietary algorithms, as well as incorporating the additional benefits of tax-loss harvesting and even retirement planning. For the most part, robo-advisors have completely changed the investment landscape for many millennials as the next generation of investors begins to move away from the traditional model of wealth building.

However, the situation in Australia is arguably just as challenging as it was in the United States all those years ago. The level of regulation surrounding the investment world is seemingly ever-growing and along with the high costs, it only adds to the frustration of trying to get independent financial advice. To access a run-of-the-mill advisor in Australia, the costs associated with the regulation and compliance run into the thousands for each client every year. Those costs are worn by the financial advisor and in time passed on to the investor, through commissions. This only encourages advisors to accept high net worth clients in a bid to minimise the impact of regulatory costs.

As time goes by these trailing commissions have a significant impact on an account’s ability to compound. As a result of the costs and regulation, the financial advisory world in Australia is ripe for change.

Adam Joseph COO at APP Securities. Sangeeta Venkatesan CEO at APP Securities. Richard Liverpool, Head of Sales and Marketing at Ignition Wealth

Recently stockbroking and investment banking firm APP Securities partnered with robo-advice company Ignition Wealth to establish the next level of robo-advice in Australia. The new mobile-first digital platform allows clients to access the full range of financial advice and products, quickly and easily on their smart phone.

Traditionally it took a great deal of work on behalf of both the client and the advisor to not only set up an effective portfolio that was tailored to the clients need, but it also came at a significant cost. For clients of APP Securities, that process has been dramatically improved thanks to robo-advisor, Ignition Wealth’s technology.

One of the key aspects for investors is that they will have the full suite of investment tools at their fingertips. That includes the ability to complete risk assessments as well as fund, invest and execute trades.


Head of Sales and Marketing at Ignition Wealth, Richard Liverpool says the new smartphone application will allow the greater flexibility that can be tailored to their clients’ needs.

“Ignition Wealth operates a unique hybrid, robo-assisted model. The client can choose the level of engagement that exactly suits their needs at that the time in their financial journey. They have the flexibility to choose and entirely digital engagement process, with all aspects of their advice journey handled online, a hybrid process with some assistance from an adviser or full traditional advice,” said Mr. Liverpool.

“The mobile-first technology allows the client to have 24-hour access via their smartphone, laptop or computer,” he said.

One of the key features of the platform is that investors that require additional services can access advice directly through the messaging platform on their smartphone. It allows clients the ability to contact advisors at any time which adds another layer to the depth of the new robo-advice model.

This new model of financial advice not only adds value, but it allows for greater levels of transparency and communication with clients.

“The digital technology allows for much of the time consuming (and therefore expensive) data entry and administration to be completed online meaning that when a client chooses to speak to an adviser the time they pay for is time truly spent gaining value from the professional human interaction,” said Mr. Liverpool.

Just like Uber and Airbnb did with the taxi and hotel industries, robo-advisers have clearly disrupted the world of financial advice. With ever improving technology and the significant reduction in cost, robo-advisors continue to evolve and offer more value to retail investors than ever before.