The founder of an Australia's robo-advice business says a law change may not be enough to allow such companies to operate in New Zealand.

Under the current law only "natural persons" may give financial advice in New Zealand but a change to the Financial Advisers Act is expected to make robo-advice legal here by 2019.

Robo advice is financial advice delivered by a computer instead of a human and involves people providing personal details, including age, gender, income, assets, financial goals and risk tolerance.

A computer programme then uses algorithms to generate advice based on the details a person has given.


The system has taken off globally as a cheaper way for the mass market to get financial advice.

In New Zealand there are growing concerns about an advice gap after research by the Financial Markets Authority found most people who got professional financial advice had assets of more than $200k, leaving question marks over how people with less money, including those with savings in KiwiSaver, get advice.

Chris Brycki, who founded robo-advice business Stockspot in 2014 and now has several thousand customers, said he was keen to enter the New Zealand market but could not do so because the company could not find a suitable banking partner.

"For us the legislation is not the impediment, it is more the banking side of things."

In Australia Stockspot has teamed up with Macquarie Bank allowing its customers to set up a bank account without having to fill in forms.

But Brycki said despite talks with a number of players here it had so far been unable to find a banking partner.

The company could not use Macquarie here because the bank did not have a New Zealand banking license.

Brycki, who will speak at a conference in Auckland tomorrow on disruptive innovation in financial services, said the other challenge with the New Zealand market was a lack of cheap investment options when it came to listed exchange traded funds.


"All the New Zealand ones are much more expensive."

Robo advice could cut the cost of advice by reducing advisor and platform fees but it also needed low-cost products to invest in, he said.

In Australia the firm invests via ASX-listed ETFs which cost around 10 to 15 basis points.

Investing in those funds from New Zealand would add hedging and currency challenges, he said.

"Even if the regulations are changed that is not going to mean it is easy for providers to set up the service."

New Zealand banks may be mulling entering the robo-advice space themselves but Brycki said banks in Australia had struggled to get a service off the ground.


He said incumbents may find it hard to get the business case through their own internal approval system because it cannibalised the profits on many of the bank's products and services, such as funds management, advice and custodial services.

Brycki, who sits on a digital finance advisory committee for ASIC - Australia's financial regulator, said greater cross-border recognition may be needed to allow providers to enter New Zealand.