National Australia Bank (NAB) has launched the first robo-advisor service among the Big Four retail banks in Australia. With these banks taking action, robo-advice will become mainstream, achieving more for the small investor market than FoFA could.
NAB announced on 9 September that it’s launching a digital advice platform, NAB Prosper, initially targeted at 40,000 of its online banking customers and eventually to all three million. Advice will be generated after customers answer a series of questions regarding their circumstances. While personalized to a degree, the advice is classified as ‘general’ under current regulations.
NAB itself suggests that as many as 80% of Australians currently do not access any financial advice, making this its target market. With the Verdict Financial 2015 Global Retail Banking Survey also showing that 74.5% of those investors who do not receive professional financial advice cite high costs as a factor, a no-cost service such as NAB Prosper addresses one of the key barriers in the market.
NAB Prosper currently doesn’t recommend any specific products and is confined to superannuation and insurance, but there are plans to expand it and include credit, estate planning, and investment advice. Once these are brought online and the other Big Four invariably roll out their own versions, most Australians will have unprecedented access to basic financial advice.
Robo-advisors will accomplish what the government’s Future of Financial Advice (FoFA) reforms have failed to do: ensure smaller investors have access to financial advice, even if this is just in the form of a sophisticated algorithm.
– This article is reproduced with kind permission from Verdict Financial. Some minor changes have been made to reflect BankNXT style considerations. You can read the original article here. Image: Luis Llerena