Online investment management services (also known as “robo-advice”) are a relatively new approach to investing that uses technology, the internet and automation to make professional investment advice more accessible and affordable..
It can offer significant benefits for both new and experienced investors looking for help (versus DIY) to construct a well diversified investment portfolio that aligns with one’s investment time horizon, risk profile and specific goals.
When exploring robo-advice, you might ask yourself these questions:
- Why can’t I just choose my own ETFs and construct and manage my own portfolio?
- What are the benefits of a robo-advisor?
- Why would I use Six Park rather than a micro-investing platform like CommSec Pocket?
While DIY investing or micro-investing platforms are suitable for some investors at varying stages of their lives, we strongly believe that using a robo-advisor like Six Park can offer significant benefits for many investors.
This blog post looks at some advantages of robo-investing compared to doing it yourself.
1. Low costs for an advised service
One of the biggest benefits of robo-investing can be low costs when considering the breadth of service provided.
The use of technology to streamline services and functions means that the cost for robo-advice services can be far less than doing it yourself (DIY).
Here’s an example: If you wanted to replicate a Six Park portfolio, you’d need to buy up to eight individual ETFs and pay brokerage fees on each one. If you rebalance your portfolio once a year, that’s up to an additional eight trades.
At (say) $5 per trade, that’s sixteen trades or $80, assuming no other trades for your portfolio.
In comparison, Six Park’s fees start from $6.25 a month (or $75 a year), including initial trades and periodic rebalancing.
Six Park’s fees also include the oversight and guidance of investment management from our expert Investment Management Committee. So you are not just getting trade execution, you are getting the help we feel investors need to navigate the investment management process.
2. Let someone else rebalance your portfolio
With robo-investing, we do the heavy lifting to periodically rebalance your portfolio to keep you on target with the recommended asset allocations to suit your goal and risk profile.
That means you don’t need to worry about constantly monitoring and adjusting your portfolio as markets fluctuate.
3. Access to professional advice
It is not easy to make your own asset allocation decisions without guidance.
With a robo-advisor, the combination of 1) a risk profile tool to assess your recommended asset allocation with 2) the oversight of a professional investment committee (all delivered digitally) means you can get help and advice that has traditionally been provided only to those with large sums of money to invest.
At Six Park, our world-class Investment Advisory Committee oversees our investment strategy and manages the construction of our portfolios to ensure you’re getting the most from your investments. Our Investment Advisory Committee is made up of former JP Morgan Australia chairman Brian Watson AO, former Australian Government Finance Minister Lindsay Tanner, and former Managing Director of Tudor Investment Corporation Mark Nicholson – some of Australia’s leading financial minds.
4. Help in aligning your asset allocation to match your risk profile and goals
At Six Park when you take our online assessment, we consider factors like your risk tolerance, time horizon, and goals, and then recommend your portfolio accordingly.
The result is a globally diversified portfolio of investments that we feel is well-aligned with your personal situation and long-term financial goals.
5. Consolidated tax reporting
Every year, come tax time, our clients tell us how grateful they are for our consolidated tax reporting.
Instead of spending time piecing together the information from all the individual statements from your ETF issuers, we provide all the information you need in one easy-to-read format.
6. Security and peace of mind
Some investment services pool your funds with other investors, which means that if something goes wrong, you’re not in control.
With Six Park every client has their own Holder Identification Number, a unique number that is issued to you by the ASX when you become a client of a broker. That means that you hold the investment in your name.
7. You can set and forget, but we won’t
Just because you can do it yourself doesn’t always mean that you should do it yourself.
Your time is valuable and there is a cost associated with DIY investing. You need to have the time and knowledge to regularly review your goals and risk profile and rebalance your portfolio. You need to assess which ETFs best suit your investing needs.
Letting a robo-advisor like Six Park handle your investments means that experts properly manage your investment portfolios for you – saving you time, money and stress.
How Six Park can help you
Ultimately, the decision to use a robo-investing service or to manage your investments yourself is a personal one. However, the advantages of using a robo-advisor like Six Park are certainly worth considering.
Robo-investing is a great solution for those who are looking for a more hands-off approach to investing. It can help you diversify your portfolio in a much more cost-effective manner and can also make managing your investments much easier. It also has the potential to save you time and provide you with more peace of mind.
This article may contain general financial product information but should not be relied upon or construed as a recommendation of any financial product. This information has been prepared without taking into account your objectives, financial situation or needs.
For further details on our service please see our Financial Services Guide at http://www.sixpark.com.au. Past performance is not a reliable indicator of future performance.