Robots fuel change for the advice business

Peter Chun: consumers "more demanding". Picture / Nick Reed

Gone are the days when investors gave little thought to the way their retirement savings are managed.

The rise of consumerism and KiwiSaver's growth mean investment managers' clients are becoming increasingly demanding.

That's the view of Sydney-based Peter Chun, general manager of product and investments at Colonial First State, who gave his opinions on "mega-trends" in funds management at the Infinz finance industry conference.

"Our industry is a classic example of information asymmetry -- the consumers typically have less information than the providers," Chun said. "But I think we're starting to see that balance shift. There's going to be increasing engagement from consumers. With the impact of technology such as social media, consumers are now becoming much more demanding on the providers."

He said schemes such as KiwiSaver meant savers had much more interest in the way their retirement savings were managed.

"People can see an account -- they want to be engaged," Chun said. "They'll ask more questions, whereas in the old world it was much more apathetic."

Another major dynamic in the funds management industry, said Chun, was the changing needs of baby boomer investors as they reach retirement age.

"Previously, the industry has focused on accumulation and maximising return because ultimately success was having as much in your pot of money as you could," Chun said. "In that draw-down phase, it's about preserving what you've earned and ensuring that it lasts as long as possible." That need was driving increasing demand for investments that provide regular income.

Meanwhile, Chun said "robo-advice" was also an emerging trend. This involves automated systems that give financial recommendations, often for low-cost, passive investments such as exchange traded funds (ETFs).

While it is yet to become widely available in New Zealand, robo-advice is increasingly popular across the Tasman. National Australia Bank became the first major Australian bank to offer robo-advice when it launched its NAB Prosper online advice service last month.

Chun said there was scope for robo-advice to be "married up" with KiwiSaver in New Zealand.

"Watch this space -- I reckon you guys will see some of it."