The Banking Royal Commission continues to reveal serious problems in the wealth management industry - in particular, conflicts of interest, high fees and a lack of transparency. Online investment management (often known as "robo-advice") was born in the United States after the Global Financial Crisis to address similar problems and now manage hundreds of billions of assets overseas. It's no coincidence that awareness and trust of robo-advice in Australia is now gaining serious momentum.
When I co-founded Six Park four years ago with former JP Morgan Australia chairman Brian Watson AO, it was with the explicit aim of addressing a serious problem for Australian investors - namely, that it was difficult, confusing and expensive to get professional investment advice and ongoing management.
In short, in far too many instances, consumers' best interests have not been properly served.
As media coverage continues to highlight the issues being uncovered, here are a few key pieces from recent weeks:
Robo-advisors march in the wake of Royal Commission scandals - Australian Financial Review (18 April 2018)
Key quote: "Often referred to as 'robo advisers', these technology companies are cutting investment fees through automation thereby removing the human foibles dramatically exposed by Commissioner Kenneth Hayne's inquiry."
Comment: Six Park is leading this new wave of tech-driven services, differentiated by our world-class Investment Advisory Committee. We believe our value proposition is unmatched in the industry.
"Show me the incentive and I will show you the outcome" - The Age (Motley Fool, 19 May 2018)
Key quote: "Next time you’re dealing with someone in the financial services industry, ask yourself 'What are their incentives?'. You might just be surprised what you uncover."
Comment: Six Park has one financial incentive: delight and retain our customers as they are our only source of income. We have one simple, transparent fee that includes rebalancing and trading costs, and we do not pay or accept commissions.
Three uncelebrated edges - The Reformed Broker (18 May 2018)
Key quote: "Jeff Bezos and Warren Buffett had been friends for a while and, according to Bezos, one day they got to talking about Buffett’s strategy. 'You are the second richest man in the world and yet you have the simplest investment thesis. How come others didn’t follow this?' the Amazon founder asked. Buffett replies: 'Because no one wants to get rich slowly.' "
Comment: This article advocates three principles for investment managers: tell the truth, keep it simple, and be at peace with being "boring". The writer points out that making changes to a client's investments for the sake of it is rarely beneficial. These principles are fundamental to Six Park's values and culture. Investing isn't a game, nor is it always exciting - we understand that and aim to help our customers understand it too.
Seven deadly sins of investing - 9Finance (5 May 2018)
Comment: Another article underscoring Six Park's investment philosophy. We are being increasingly recognised as a smart way to invest as the Royal Commission reveals the importance of understanding your own financial destiny.
If you'd like to talk more about how Six Park is helping to solve a serious problem in the industry, you can book a personal phone consultation with my team by clicking here.
I'd also like to thank our customers for trusting us to help manage their investments. Tell your friends about us if you are so inclined and we’ll waive your fees for three months for each referral.
The groundswell for this service is growing and needed here in Australia - I'm thrilled that you're part of it.