Some op­tions if you want ad­vice from a ro­bot

Us­ing an on­line tool, in­stead of in­ter­act­ing with a fi­nan­cial ad­viser face-to-face, is catch­ing on around the world. looks at three of­fer­ings in the South African mar­ket.

Weekend Argus (Saturday Edition) - - FRONT PAGE -

Face-to-face fi­nan­cial ad­vice may still be the norm in South Africa, but times are chang­ing, and the ad­vent of “robo-ad­vis­ers” has brought an in­ter­est­ing dy­namic to the evolv­ing fi­nan­cial ser­vices in­dus­try.

Robo-ad­vis­ers ar­rived with much fan­fare in the United States in 2012, promis­ing to im­prove on the face-to­face model, in par­tic­u­lar by pro­vid­ing ad­vice at much lower cost.

Jaco van Ton­der, the direc­tor of ad­vi­sory ser­vices at In­vestec As­set Man­age­ment, says robo- ad­vis­ers are use­ful to clients who can­not af­ford to pay for face-to-face pro­fes­sional fi­nan­cial ad­vice.

“Robo-ad­vice tools can also help fi­nan­cial ad­vis­ers to re­duce the cost of sign­ing on a new client, since the tool takes care of a large part of the in­for­ma­tion-gath­er­ing and client-ed­u­ca­tion process. This en­ables firms to deal prof­itably with smaller clients,” Van Ton­der says.

Ac­cord­ing to the Fi­nan­cial Ser­vices Board, com­pa­nies op­er­at­ing robo-ad­vis­ers need to be li­censed fi­nan­cial ser­vices providers.

There are plenty of op­tions avail­able if the idea of en­trust­ing a ro­bot to grow your wealth ap­peals to you. Per­sonal Fi­nance looks at three of­fer­ings in the South African mar­ket: The ser­vice was launched last year by listed as­set man­ager Syg­nia. De­pend­ing on your in­vest­ment re­quire­ment and risk ap­petite, RoboAd­vi­sor will ex­pose you to unit trusts, ex­change traded funds (ETFs), money mar­ket funds or cash.

The lo­cal in­dex-track­ing prod­ucts are Syg­nia’s. Other prod­ucts, such as off­shore and money mar­ket funds, “may be man­aged by third­party as­set man­agers se­lected by Syg­nia”.

The com­pany says RoboAd­vi­sor is not meant to of­fer com­pre­hen­sive fi­nan­cial plan­ning ad­vice.

“RoboAd­vi­sor is de­signed to of­fer a low-cost level of ad­vice based only on the in­for­ma­tion dis­closed by you. If you change any of the in­vest­ment pa­ram­e­ters (for ex­am­ple, your rec­om­mended risk pro­file), the ad­vice given will no longer hold,” the com­pany says.

• Min­i­mum in­vest­ment amounts: lump sum of R10 000 or a monthly debit or­der of R500.

• Man­age­ment fees: 0.5% a year in­clud­ing VAT.

• https://www.syg­­vi­sor/syg­nia-roboad­vi­sor

This ser­vice is op­er­ated by Jo­han­nes­burg-based ex­change traded prod­uct in­vest­ment plat­form iTrans­act. The com­pany was es­tab­lished in 2010, and it launched its robo-ad­viser ser­vice last month.

Lance Holms, the head of iTrans­act, says the ser­vice looks across all as­set classes and com­bines them to form a port­fo­lio that suits your in­vest­ment goals. With In­trans­ac­tGo, you in­vest in ETFs that track the do­mes­tic money, bond, prop­erty, do­mes­tic eq­uity and off­shore eq­uity mar­kets.

“It will not favour one as­set man­ager or fund over an­other; it will only pick the best funds for in­vestors. It will au­to­mat­i­cally re­bal­ance your port­fo­lio so that you never have to worry about the mix of as­sets you have cho­sen. In­vest­ing in the mar­ket has never been this easy,” Holms says.

• Min­i­mum in­vest­ment: lump sum of R5 000 or a min­i­mum monthly con­tri­bu­tion of R300.

• In­vest­ment term: there is a min­i­mum term of one year.

• Man­age­ment fees: not more than 1.14% a year in­clud­ing VAT, de­pend­ing on the size of the in­vest­ment.

• https:// itrans­ac­tgo. itrans­act. The com­pany is in­de­pen­dently owned and has ap­pointed An­chor Cap­i­tal as the as­set man­ager of its robo- ad­viser. The robo-ad­viser, which was launched last year, cre­ates a port­fo­lio to meet your in­vest­ment goal (for ex­am­ple, re­tire­ment or buy­ing a house) based on your re­sponses to its ques­tions.

A port­fo­lio of unit trusts and shares will be de­signed for you, de­pend­ing on the size of your in­vest­ment and in­vest­ment pro­file. The unit trusts are An­chor Cap­i­tal, funds, and any share port­fo­lio will be man­aged by the com­pany.

“We care­fully an­a­lyse your in­vest­ment pro­file and ap­petite for risk in or­der to cre­ate a port­fo­lio that suits your goals. Smaller amounts of money would be more ap­pro­pri­ately in­vested into a unit trust, where costs are slightly lower. How­ever, at over R250 000 it makes more sense to in­vest in in­di­vid­ual ETFs and shares. What­ever your fi­nan­cial in­vest­ment sit­u­a­tion may be, Bizank will de­velop a tai­lored port­fo­lio plan that will max­imise your re­turns,” the com­pany says.

• Min­i­mum in­vest­ment: a lump sum of R10 000 or a monthly debit or­der of R1 000.

• Man­age­ment fees: be­tween 1% and 1.5% ex­clud­ing VAT.

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