Source: Kiwi Wealth
Kiwis are open to the idea of a robo-adviser helping them manage their finances but still want real people available to help them with some decisions, a new survey commissioned by Kiwi Wealth shows.
The survey, ‘Rise of the Money Robots: Kiwis’ attitudes to robo-advice’, sheds light on Kiwis’ attitudes to robo-advice and explored whether they would consider taking advantage of it to help manage their financial futures and lift low engagement levels in retirement planning.
The Perceptive Research survey of 1001 people looked into Kiwis’ attitudes toward the use of robo-advice to automate the management of investment and retirement savings. Robo-advice has taken off overseas but is a relatively new concept in New Zealand.
While only 8% of respondents had heard of robo-advice for financial planning, one in five would consider using a robo-adviser to manage their retirement planning.
However, almost half of respondents said they would prefer a human financial adviser over a robo-adviser for professional opinions and views, or when there were changes in financial or personal circumstances.
"The survey findings clearly show that Kiwis see robo-advice as complementary to human financial advisers, rather than as a total replacement of experts,” said Joe Bishop, Head of Retail Wealth and Marketing at Kiwi Wealth.
“That reflects how new robo-advice is as a concept, and the lack of a proven track record for the technology here. However, that’s changing, and we expect things to only accelerate.”
In July, the Government signalled its intention to allow robo-advice as part of its review of the Financial Advisers Act 2008 (FAA).
“That’s a very important step,” said Mr Bishop. “The technology coming online now has advanced well beyond what was around when the FAA became law in 2010. If we’re to bridge the advice gap and get people involved in planning for retirement, particularly with KiwiSaver, robo-advice will be vital.”
Robo-advice would make financial advice available to more New Zealanders.
“There are 2.6 million of us enrolled in KiwiSaver but only around 1800 authorised financial advisers available to provide personalised advice,” said Mr Bishop.
“The human element will remain important in the advice mix, but robo-advice has the potential to democratise access to financial advice for all New Zealanders, particularly as KiwiSaver accounts grow and other investments play a role.
“The long-term well-being of the country requires us to manage our retirement investments well. New technology will make it easier for Kiwis to get the financial advice they need.”
Key findings from Kiwi Wealth’s ‘Rise of the Money Robots: Kiwis’ attitudes to robo-advice’ survey:
Less than 20% of Kiwis currently have a financial adviser.
A fifth of respondents (20%) indicated they haven’t checked their retirement finances in the past 12 months.
Kiwis don’t check on their retirement investments more often due to a lack of knowledge (26%), not having time (22%) or feeling that retirement is too far away.
Young Kiwis see robo-advice as an opportunity to get advice on setting financial goals; older Kiwis see robo-advice as a way of helping them to realise those goals.
Access to human financial advisers is more important the older one gets, with older generations more hesitant to entrust robo-advisers to manage their retirement savings.
Robo-advice should complement human financial advisers.
Kiwi Wealth’s digital retirement income planning tool uses a range of calculations and algorithms to allow members of its KiwiSaver Scheme to estimate the future worth of their KiwiSaver investment.
The tool uses a member’s current balance, contribution rates, projected returns and other economic factors to calculate an estimate lump sum and retirement income. It also calculates how changes to factors such as fund type and contribution level could affect the growth trajectory of their investment and members can make those changes, most at the click of a button.
Most recently, the tool now also incorporates the potential additional income provided by New Zealand Government Superannuation. The combined estimate is built into a simple “dashboard” giving members an even clearer picture of the income they may have available when they retire.
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