NZ law not only robo-advice hurdle, says boss

The founder of an Australian robo-advice business says a law change may not be enough to allow such firms 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 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 advice had assets of more than $200,000, 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, 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 licence.

Brycki will speak at a conference in Auckland today on disruptive innovation in financial services.