What is robo advice?

Robo advice is financial advice delivered online, using algorithms and technology to build and manage your diversified investment portfolio.

Robo advisors automate a lot of the time-consuming jobs that are critical to good financial management, including portfolio rebalancing, risk assessment and rapidly establishing a low-cost diversified portfolio.

Robo investing doesn’t rely on picking individual stocks or timing the market and means you get to invest your funds in a smart, low-cost way.

The foundation of robo investing is based on Modern Portfolio Theory, an analysis by authors who won a Nobel Prize in Economics.

Happy young woman using laptop


How does robo advice work?

Most robo-advisers, including Six Park, start with an online questionnaire that assesses how you feel about investment risk and how long you plan to invest.

This results in an investment recommendation, which is the basis for your portfolio. Once you’ve opened an account and deposited money, the robo advisor moves from offering advice to actual management, buying exchange-traded funds (ETFs) in proportions that correspond with the risk profile you’ve accepted.

Your investments are diversified across a variety of asset classes and geographies, and your portfolio will be periodically rebalanced so that, as certain holdings rise or fall in value, your investments stay on track with your target asset allocation.

Any new money you add will be allocated in the same way.

Lower costs for investors mean more funds are invested and benefit from the power of compounding interest.

Cheerful mature couple using laptop computer at home


Why should I use a robo advisor?

Simply put, robo advice helps you to grow your wealth in a smarter, simpler and more affordable way.

Robo-advice can save you significant time and stress, by providing a combination of professional oversight and the automation of portfolio rebalancing to improve long-term outcomes.

Robo advice is about trying to achieve the best investment returns given your risk profile and investment time horizon, while also demystifying the complex world of investments.

Most robo-advisors rely on the core investment philosophy that managing your asset allocation (diversification) and keeping costs low will produce optimal investment returns versus picking individual stocks, timing the market and paying exorbitant fees to fund managers who tend to underperform the broad market indices.

Smart phone with diversified portfolio


What are the benefits of robo advice?

Investment diversification

With the emergence of Exchange Traded Funds (ETFs), robo advisors can build you a portfolio of investments spanning various global asset classes at a very low cost.

This investment diversification addresses a major problem with many Australian investors; that is, being overly concentrated in a small number of shares/assets, which has been shown to produce poor investment returns over time.



By automating many of the time-consuming investment management processes, robo-advisors are generally able to provide investment guidance, management and accessible reporting at a low cost (varies by provider).


Harnessing the power of compound interest

Robo-advice services use technology to reduce costs, so one of its key benefits is harnessing the power of compounding interest over time. It’s not about timing the market, but about “time in the market” and generating strong risk-adjusted returns over the medium to long-term.


Personalised guidance

Robo-advisors use assessment tools and technology to create and manage a strategy based on your personal situation.

You can easily update this strategy if your personal situation changes (such as the arrival kids, loss of a job, or receiving a large bonus or tax return).


Automatic rebalancing

Periodic portfolio rebalancing is crucial to optimising long-term investment returns.

With robo investing, your investment portfolio will be rebalanced automatically as required, to ensure your asset allocation remains in line with your recommended strategy over time.


Simple and transparent

Robo-advisors streamline and simplify the investment management process, which should make for simpler and transparent pricing, and provide you with online access to view your holdings and performance in a way that’s easy to understand.

This helps build trust that you know what’s going on with your investments and what you are paying in fees.


Investments in your name

This is one important area that can vary depending on the robo-advisor. When you invest with Six Park, your cash account and all investments are held in your name so you have easy access to your assets and the ability to withdraw funds or sell assets at short notice if needed.


Expert advice for smaller investment amounts

Robo-advisers are opening up the world of investment to people with much smaller investment amounts.

A traditional financial adviser might only find it economically viable to meet with clients with $500,000 or more to invest, whereas most robo-advisers can offer their services for investments of $5,000 or even less in some cases.

By focusing on asset allocation and keeping costs low, robo-advice is a smart way to optimise long-term investment returns.

Financial advisers - Six Park


Who is robo advice suitable for?

Robo advice is best for people who have cash they want to invest in a smart, low- cost, low-hassle kind of way.

Robo advice is well suited for:

  • New investors who do not have the experience to manage a portfolio;
  • Time-poor investors;
  • Self-managed super fund (SMSF) trustees seeking affordable investment diversification;
  • Non-SMSF investors who want a well constructed investment set-up based on a diversified, professionally managed portfolio of ASX-listed ETFs;
  • Early savers and people in the wealth accumulation phase (typically aged from 25-55) whose investment requirements are fairly simple and whose time horizon is medium to long term (5 years+); and
  • Parents or grandparents investing for loved ones;
  • Active investors (those who typically buy and sell individual stocks) who also want a more passive, diversified, risk-adjusted base to complement the more speculative aspect of their investing; and
  • Financial advisers and wealth management firms, to help them effectively and cost-efficiently service a larger client base.


Robo-advice is probably not suitable for:

  • Anyone who wants to pick their own stocks and try to time the market (when to buy and sell on a regular basis);
  • Anyone with complex investment or wealth management requirements.

Tailored investment solutions - Six Park


How do I choose a robo advisor?

Just like human financial advisers, not all robo-advisors are created equal. This is particularly the case when it comes to the experts who are responsible for setting the asset allocation parameters and making periodic adjustments when needed.

Costs, user experience and customer support can also vary from one service to the next.

Before selecting a robo-advice service, make sure to consider the following six factors.


The investment team behind the ‘robot’

You need to trust that although the service is automated, the people behind the “robot” have the qualifications, track record and asset management experience to manage your hard earned money. Slick technology does not guarantee performance, so check the track record and proven investment experience of the team making important decisions behind the scenes.

Asset allocations need to be professionally assessed and reviewed, but not all robo-advisers offer this level of service, so check whether the service you’re considering has a human overlay of experienced people assessing the investments.


Ownership of assets

Determine if the robo advisor will pool your investment with other clients’ money or keep investments separate by setting up each client with a cash management account and trading account in their own name.

We recommend you choose a robo advisor that enables cash accounts and investments to be held in the clients’ names.

This is important for two reasons:

1) easier and more transparent investment performance reporting; and

2) your assets are not in a pool with other assets that might be hard to retrieve if your robo advisor ceases operations.



During your assessment, account set-up and ongoing account management experience, if you don’t know what you’re getting or why, then back off quickly. The process should be easy to understand and transparent.


Investment performance

Performance of an automated investment service is driven largely by the inputs and assumptions in the “robot”. Different robo-advisors use different ETFs and investment philosophies, so ensure you’re comfortable with their approach while considering their long-term performance.


Be wary if there is no evidence that the service will keep in touch to make sure that the automated advice remains relevant as your life and investment needs change.

Smiling young couple using tablet


How does Six Park provide robo advice?

At Six Park, we consider robo advice as a low-cost, automated investment management service backed by Australia’s pre-eminent investment experts.

The use of automation, combined with an element of professional human oversight, can help eliminate common mistakes that investors typically make, such as impulsive or emotionally driven decisions.


How do I get started with robo investing with Six Park?

At Six Park, becoming a robo investor is just five simple steps.


Step 1 – Assessment

You start with completing an online assessment to establish your personal situation, your goals, your capacity and appetite for risk, and your investment horizon.

Your answers are then used to determine a suggested investment strategy curated by our expert Investment Advisory Committee.


Step 2 – Get a Recommendation

Your automatically generated advice includes a proposed asset allocation (%) which provides investment diversification across various asset classes such as Australian shares, international shares, emerging markets shares, bonds, listed property, infrastructure, global listed property, cash yield.


Step 3 – Set up your accounts

To start with robo investing, we will establish two online accounts in your name – a cash management account and a brokerage account.


Step 4 – Start investing

Robo-advisors such as Six Park typically invest funds in Exchange Traded Funds (ETFs). ETFs are index funds that enable simple, low-cost investment diversification using a single ASX-listed fund. ETFs are proving to be one of the most effective and popular investment tools in Australia with more than 200 ETFs listed on the ASX managing more than $70 billion of funds at the end of September 2020.


Step 5 – Online access 24/7

You can access your portfolio and performance reports online at any time, 24/7. That means you can easily update your risk profile or time horizon if your personal situation changes.

We also rebalance your account automatically as required. This is a clever way to keep you in line with your target asset allocation and is proven to help optimise overall investment performance.


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