Local investment behemoth tip-toes into robo-advisor market
Quote:anlam Investments has tip-toed into the robo-advisor space with Smart Smart Invest, which could best be described as a “light” version of other competitive products in the market. Its online tools are designed to help investors find the “right combination of funds”, based on the setting of goals and contribution levels.

Like many of the other ‘robo-advisor’ products in the market, Sanlam’s tool offers advice that is fairly limited in nature. It uses variables including the goal-type and -amount, time horizon, risk tolerance and contribution levels to suggest the best fund or combination of funds to help you achieve your target.

True robo-advisors, like the US’s Vanguard Personal Advisor Services, Schwab Intelligent Portfolios, Wealthfront, or Betterment don’t tend to treat this problem as a one-off sales conversion process.

Of the currently available options in the local market (SmartRand, Bizank, Sygnia RoboAdvisor, Beanstalk, SIPP and Sanlam Smart Invest), only three – Sygnia, Bizank and SIPP – explicitly mention automated and regular rebalancing of portfolios. None describe this in any amount of detail at all.

The others seem to treat this as a one-way process to suggest specific funds (or a combination of underlying funds) to clients and get them invested. This is understandable, however, given how new these products are. Most don’t even call themselves ‘robo-advisors’, instead preferring to use labels like “self-invest platform” or “online investment advice service”.

In other words, there is very limited ‘intelligence’ and what these platforms are for the most part are (limited) automated advice tools. They’ll take some data (time, risk appetite) and segment you into one of a few categories as best possible. What they (very) arguably should be doing is extracting more granular data from investors and then using that to intelligently suggest the most efficient method of saving, based on that person’s context.

For example, instead of needing the client to explicitly select tax-free savings, these services should first attempt to take advantage of the benefits inherent in this structure with the first R30 000 of their annual savings (if only there was a secure, centralised way of investment providers to look up whether someone had made use of their allowance!). Then, surely, a retirement annuity would be the next in-line, especially when a (potential) client specifically indicates they’re looking to save for retirement (and when they don’t already have one). These suggestions should be dynamic and far more intelligent than they are!

Financial advisors will argue that this is straying into highly-specialised, regulated (and risky) terrain, but this is precisely what the world-leading platforms (particularly in the US) offer.

Wealthfront, as an example, ‘sells’ the fact that it monitors the underlying portfolio every day for “opportunities to rebalance” and offers “tax-aware asset allocation”. Here in South Africa, many offerings rely on that management happening one layer away, in the underlying fund. You could argue that rebalancing is not important on the platform because it is being dealt with, but that doesn’t get away from the fact that there isn’t much ‘intelligence’ in the locally-available robo-advisors. Yet. 

What all these services have managed to achieve – thankfully – is an entirely electronic advice and account opening process. In the broader market, however, this has become the standard and it is entirely normal in 2016 to open a unit trust account online at most asset management firms.

Read More: MoneyWeb

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