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What the hell is robo-advice?

After chasing a football for the last 16 years in the AFL the competitor in me has moved into my new career, chasing investment returns. I joined Six Park a while ago and I’m now helping Australian investors create their own diversified portfolio of investments. When I explain to people what I’m doing now the first question they rightly ask is “What the hell is robo-advice”, which is quickly followed by “So what do Six Park do”?

 

What is robo-advice?

Great question! Robo-advice simply involves automating a lot of the time-consuming jobs involved in financial management, such as assessing an investor’s attitude to risk and actually establishing a diversified investment portfolio. This automation helps keep fees lower and also helps investors avoid making impulsive decisions.


What is a diversified portfolio?

I want to break some of the jargon down. A diversified investment portfolio simply means that instead of putting all your eggs in one basket and investing in one specific area such as Australian shares, you’ll be buying into assets both in Australia and around the world. Six Park’s portfolios will also buy into assets such as bonds, infrastructure and property to further manage potential risks. Diversification spreads investment risk – because the likelihood of all your different assets losing value at the same time is less than the likelihood of one asset class performing badly.


Six Park Client Asset Allocation

What is Six Park?

Six Park uses automated investment management – or robo-advice – and adds human oversight. What does that mean? It means Six Park combines the automated elements with an investment advisory committee with decades of financial experience. The advisory committee meets regularly to look at the assets in each portfolio and to consider what’s happening in the world and how it might affect financial markets.


How does it work?

First up, you take an online assessment that takes in how much money you want to invest, how much risk you’re happy to take, and how long you might want to invest. That assessment leads to an investment recommendation for a diversified portfolio with allocations across different assets – these allocations are different for people who want aggressive growth or people who might take a more conservative approach.

Up to this point it’s free. If you’re happy with the recommendation you can proceed with the process. If you don’t want to proceed, then you can always leave and just go back on Facebook! 

If you like the recommendation, then Six Park will set up a cash and brokerage account for you (importantly you will not be charged to set up these accounts!). These allow you to begin your investing journey.

You will be invested through Exchange Traded Funds (ETFs) which are simply index funds that allow clients to have low-cost, diversified investments. Your investment process has now begun and all investments are in your name. You can log in anytime to see your own portfolio and we will monitor your portfolio and rebalance as required – and rebalancing and trades are all free.

Ongoing, you’ll benefit from the oversight of our world-class Investment Advisory Committee.


Smart Phone With Diversified Portfolio

So how does Six Park make money?

Six Park charge a small management fee to set up, purchase, monitor and rebalance your investments. We charge .5% or less - on a $10,000 investment that’s a total annual fee of just $50. This fee includes your risk assessment, portfolio recommendation, execution of all your trades, monitoring of portfolio and rebalancing trades. There are also very low indirect fees that ETF providers charge and these are embedded in the ETF share price.

 

Who monitors the investments and asset allocations that underpin the portfolios?

Our investment advisory committee includes:

  • Brian Watson AO (Former Chairman of JP Morgan Australia)

  • Lindsay Tanner (Former Australian Government Minister for Finance)

  • Paul Costello (Founding General Manager of the Australian Government’s Future Fund)

Our investment committee meets to review each asset class, manage risks, look into the returns and helps us assess whether any changes need to be made to the ETFs we use. You can read more about our investment advisory committee here.

 

Where can you find out more?

Click here to read more about how we invest, or better yet try our assessment and get your free investment portfolio recommendation. Remember, it’s free to trial… and if you don’t want to proceed you can always go straight back to Facebook.

Ted Richards is a former Australian Rules footballer who holds a Bachelor of Commerce and a Masters of Applied Finance. He is now Six Park’s Director of Business Development.

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