Skip to main content
You’d be forgiven if you think these are the same thing. Our industry and its regulators use these terms interchangeably. And while they have similarities, our view is, one is the evolution of the other.

What is robo-advice?

Robo-advice platforms or robo-advisers are online-only investment services that usually take customers through a simple fact-find and then use algorithm calculations to allocate or suggest a suitable set of non-retirement investments. Those investments are then managed on an ongoing basis for a fee.

Robo-advisers first appeared in the mid-2000s and gained traction across investing elements of a client’s portfolio after the GFC. Robo presented an opportunity for customers to self-serve, remove the middleman, reduce admin overheads and provide institutions with the ability to apply efficiencies of scale for their products.

Since then, the robo-advice market hasn’t stopped growing, with the US, UK and Europe leading the charge.

There have been changes and iterations over the years. Initially, customers could merely self-invest. But then fact-finds and risk profiling were introduced, allowing customers to choose from a range of suggested investment options based on their answers.

Customers are charged an annual flat fee of their total account balance, which can be significantly cheaper than a face-to-face adviser. Overall, robo-advice has enabled a quicker, simpler and more affordable way to invest.

Who’s using robo-advice?


According to the Investment Trends 2020 Robo-advice Report, robo-advice services were accessed by 7% of investors in Australia, compared with 23% of investors in the US.

Investors are typically individuals with a medium-high financial literacy level who tend to use robo-advice for one financial area of their lives. Demographically, Millennials, Gen Y and beyond hold the promise for institutional growth in the longer term.

However, Deutsche Bank data suggests their typical robo-advice client is aged between 45 and 54 and earns on average three times the median income of a client at a bank.

This backs up research from Boston Consulting Group in their report Global Wealth 2019, Reigniting Radical Growth. It points to an under-served middle band of affluent households that is predicted to grow significantly over the next five years to the tune of $18 trillion in investable assets.


Aside from robo-advice companies, institutional adopters such as Charles Schwab, BlackRock, Vanguard, Saxo Bank, Lloyds, Santander and ING are among a swiftly growing group using robo, either through their existing platforms or by launching a separate brand.

They’ve experienced mixed success, and some of that may be due to whether they built the capability themselves, acquired a provider, or partnered with a third party.

What is digital advice?

Digital advice is the evolution of robo-advice and the digital enablement of advice delivery.

It’s an umbrella under which all customers can receive an advice experience personalised to their needs.

Combining digital intelligence with the human touch, it supports traditional distribution channels across the advice verticals of Holistic, Insurance, Investment and Retirement in a way that suits the client. The customer journey can be either direct/self-serve, via an adviser, or a hybrid journey where they start online but can jump off and speak to a human adviser if needed. The key to success is that all journeys use the same platform.

Digital advice is also not limited to investments only, unlike its robo predecessor. It still uses a simple fact-find and algorithm calculations for its advice, but in-built compliance and safeguards quickly and easily identify when customers are not suited to automated advice – either because of affordability, suitability or complexity.

They are then directed to additional resources or a human adviser. It’s also possible to have an adviser dial in and out of a customer’s digital advice journey, depending on their specific requirements.

If a customer invests in a recommended solution, they will be charged via product or advice fees.

Who needs to invest in digital financial advice?

If robo-advice is the investment-only D2C solution for start-ups and disruptors in Australia, digital advice is the solution for established institutions that want to move the needle of their customer base’s product holding and engagement.

The financial services industry faces a burning platform. Physical branches are closing, staff numbers are being culled, and the cost of new client acquisition and ongoing advice is increasingly unaffordable for both customers and advisers. But brands still want to have meaningful relationships with their customers and grow their business.

Institutions are already significantly investing in digital advice capabilities, from client onboarding to streamlining advice processes and anything else that can be safely digitised. The benefits of digital advice are that it brings automation across all distribution channels and advice verticals. This reduces the institution’s cost to serve and meets the individual customer need via hybrid and adviser solutions.

What does the future hold for institutions and digital advice in Australia?

For Financial Services Institutions to win in this space, they must be open to tailoring their service and coverage models to clients’ needs. Digital advice enables institutions to do this safely and efficiently.

There is a real opportunity now for established institutions with large customer bases to capitalise on the digital advice technology that’s evolved over the last decade and incorporate it into their existing customer platforms using a SaaS partner.

Doing this removes the high investment to build in-house or acquire a business that specialises in this capability. Partnering with a financial SaaS provider enables institutions to quickly add a compliant-ready, secure solution that’s easily configurable. So, they can lower the cost of delivering high-quality financial advice, ensuring the right outcomes for their customers, compliantly.

Speak to us today about implementing digital advice in your business.