Adoption of Robo-Advisory Service in the Personal Financial Planning Industry in Australia

Abstract

Everyone needs personal financial planning. The post-GFC fraud and financial crisis has resulted in confidence in financial services and professionals being at an all-time low. Financial advisors may not be affordable for everyone because of their high cost, diverse demand for financial advice, and barriers to consumers getting complete financial advice. Robo-advisory services can provide low-cost financial guidance. Robo-advisory services use artificial intelligence and algorithms to generate limited financial advice based on a client's portfolio, risk preferences, and financial goals. Robo-advisory services still have fiduciary obligation and competence concerns. This study considers regulators and service providers and then explores how ASIC guidelines facilitate the deployment of robo-advisory services in personal financial planning in Australia. This study establishes the definition of a robo-advisory services and examines its fiduciary duties, natural persons, minimum training and competency standards, and the results show that the regulations and recommendations are acceptable. At the same time, this study will explore how Australian robo-advisory service providers can help with personal financial planning. The findings indicate that service providers' product disclosure statements must be revised to facilitate robo-advisory services.