FMA lodges robo application number three

A third application to offer roboadvice to New Zealand customers is being considered by the Financial Markets Authority.

Tuesday, October 23rd 2018, 6:00AM

The FMA is accepting applications from providers who want to make use of an exemption that allows personalised roboadvice ahead of the implementation of the Financial Services Legislation Amendment Bill, which will make it legal.

Two have been granted – to Nikko Asset Management and Kiwi Wealth. The FMA said it had now received a third but would not disclose who it was from.

Kiwi Wealth is in the testing phase with its product.

Nikko Asset Management New Zealand managing director George Carter said the development of his firm’s platform was also well under way. It wants to offer roboadvice for its recently-launched KiwiSaver scheme.

Carter said he hoped the platform would be ready for final sign-off by the end of the month. Then it would likely go live with a soft launch before being promoted heavily.

“What we would like to see is modest take-up through Christmas and the new year then another push early next year.”

He said it was realistic to expect a slow take-up as a new brand to retail investors. “But you never know.”

Simplicity founder Sam Stubbs said he hoped to have an AI roboadviser in the market in 12 months’ time - but the application was not from Simplicity.

It already offers chatbot Artie.

“The key difference we will bring is a completely open-source approach, so it will have everyone’s products, and be agnostic is what it recommends. It will be happily recommend our competitors products if they are better than ours, and be available to everyone too, including our competitors,” he said.

“To make sure the advice is truly objective, we will use only publicly available data and the decisions will be vetted and approved by independent actuaries. If our products aren’t recommended that will be because they aren’t suitable, or good enough, so that will ensure we keep competitive.”

He said it was the best way to get the lowest-cost financial advice to New Zealanders.

“Everyone has a smartphone, and making roboadvice limited to certain products and services just perpetuates the hammerlock banks and insurance companies have on distribution of products, and perpetuates the rent-seeking profits they are making.

“Roboadvice will get a lot more transparency into financial products. Banks currently bet on apathy and ignorance to get people to pay too much for products they don’t need. Roboadvice will do for banking and financial products what Uber has done for taxis and Amazon for retailers. That will be great for consumers.”

He predicted every provider would submit an application within a year.

Tags: kiwi wealth Nikko AM roboadvice Simplicity