Digital advice has grown quickly in Australia. Robo-advisers can build and manage an investment portfolio for a fraction of the cost of traditional advice, often after a ten-minute online questionnaire. More recently, AI chatbots have made it possible to ask detailed financial questions at any hour and get a confident-sounding answer in seconds.
For some people and some questions, digital tools are a sensible, low-cost option. For others, they leave important gaps, often without the user realising. The difference usually comes down to how complex your situation is, how much is at stake, and how much you value having someone in your corner when markets fall or life changes.
This guide explains how robo-advice works, how it is regulated, what it does well, where a human adviser adds value, and how to decide which suits you.
Robo-advice, human advisers and AI tools compared
| Robo-adviser | Human financial adviser | AI chatbots and online tools | |
|---|---|---|---|
| What it does | Builds and manages a portfolio, usually of ETFs, based on a questionnaire | Advises on anything from a single issue to your whole financial position | Answers questions and explains concepts |
| Considers your circumstances | Limited to questionnaire answers | In depth, through conversation and fact-finding | Only what you type in, without verification |
| Typical scope | Investment portfolio, sometimes super | Investments, super, debt, insurance, tax structures, retirement, Centrelink, estate planning | Any topic, but not tailored advice |
| Licensed and subject to best interests duty? | Must be licensed; best interests duty applies to personal advice | Must be registered and licensed; best interests duty applies to personal advice | Generally not a licensed advice service |
| Cost | Low, usually an ongoing percentage fee | Higher, reflecting time and complexity | Often free or low cost |
| Support in a downturn | Automated messages | A personal conversation and a plan | None beyond what you ask |
| Complaints and dispute resolution | Through the provider and AFCA | Through the adviser’s licensee and AFCA | Generally no access to AFCA for the answer itself |
| Typically suits | Simple goals, smaller balances, hands-off investors | Connected decisions, larger sums, major life events | Learning and preparing questions |
What is robo-advice?
Robo-advice, also called digital advice or automated advice, uses algorithms to provide financial product advice without a human adviser being directly involved in each recommendation.
A typical robo-adviser works like this:
- You answer an online questionnaire about your goals, timeframe, income and attitude to risk.
- The algorithm assigns you a risk profile and recommends a portfolio, usually a mix of low-cost exchange-traded funds.
- You invest, and the platform manages the portfolio, including automatic rebalancing and reinvestment of distributions.
- You pay an ongoing fee, generally a percentage of your balance, plus the costs of the underlying funds.
Some providers offer additional digital tools for super, retirement projections or goal tracking, and some offer access to a human adviser for an extra fee, known as a hybrid model.
How robo-advice is regulated
In Australia, digital advice is regulated in the same way as advice from a person. A robo-advice provider must hold an Australian financial services licence, or be authorised by a licensee. Where it provides personal advice, it must act in your best interests and provide advice that is appropriate to you, just as a human adviser must.
ASIC’s guidance on digital advice requires providers to have people within the business who understand how the algorithms work and who meet the training standards for financial advisers. They must also monitor and test the algorithms to make sure the advice they generate is appropriate.
Many robo-advisers deliberately limit their service. Some provide only general advice, which does not consider your personal circumstances. Others provide personal advice limited to the investment portfolio. Our guides to general advice versus personal advice and comprehensive versus limited advice explain why that distinction matters.
You can check a robo-adviser’s licence on ASIC’s professional register, in the same way as checking a human adviser. Our guide on how to check an adviser’s registration explains how.
What robo-advice does well
Low cost. Because the process is automated, ongoing fees are usually lower than those of a traditional managed portfolio with a human adviser. For smaller balances, this can make a meaningful difference to returns over time.
Low minimums. Many robo-advisers accept small starting balances, making diversified investing accessible to people who would not otherwise engage an adviser.
Discipline and simplicity. Automatic rebalancing, regular contributions and diversified portfolios help investors avoid common mistakes, such as concentrating on a few shares or trying to time the market. That supports the kind of steady habits covered in our guide to financial habits that could change your future.
Convenience. Everything is available online and on your phone, at any time.
What robo-advice doesn’t do
It only sees what the questionnaire asks. A robo-adviser’s recommendation is only as good as the information it collects. A short questionnaire cannot capture a pending inheritance, an upcoming divorce, a health issue, a business sale, or how much of your wealth is tied up in property. Our guide on whether you are investing too aggressively or too conservatively shows how much more goes into a sound risk assessment.
It usually advises on one thing. Most robo-advisers focus on the investment portfolio. They generally do not advise on whether you should invest at all, or whether paying down your mortgage, adding to super or holding more cash would serve you better. Those are often the most valuable decisions.
It rarely handles complexity. Family trusts, SMSFs, company structures, Centrelink strategies, aged care, estate planning and tax planning are generally outside scope. Our guide to family trusts versus super shows the kinds of structural decisions algorithms are not designed to make.
It can’t coach you through a downturn. The biggest risk for many investors is not the portfolio they choose, but the decisions they make when markets fall. An app can send an email reminding you to stay the course. It cannot have a conversation that stops you selling at the bottom. Our guide on whether to sell your investments in a downturn explains why that matters.
It doesn’t follow up on life changes. A human adviser providing an ongoing service reviews your plan as your circumstances change. A robo-adviser relies on you updating your answers.
What about AI chatbots?
General-purpose AI chatbots can explain financial concepts clearly and help you prepare questions. Used well, they can make you a more informed client.
But they are not licensed financial advisers. Their answers are general information, they are not subject to the best interests duty, and you generally have no access to the Australian Financial Complaints Authority if an answer turns out to be wrong. They can also give out-of-date or incorrect information about Australian rules, such as contribution caps, Centrelink thresholds or recent tax changes, and they cannot verify what you tell them about your situation.
A sensible approach is to use AI tools for learning and preparation, and to rely on licensed advice for decisions. Our guide on what most people get wrong before seeking financial advice covers how to prepare well.
What a human adviser adds
The full picture. A human adviser can look across your cash flow, debt, super, investments, insurance, tax position, Centrelink entitlements and estate plan, and make recommendations that work together.
Judgement about the right question. People often come to an adviser with one question and leave having addressed a different, more important one. That kind of reframing is hard for an algorithm to do.
Behavioural support. Advisers help clients stay disciplined during market volatility and avoid emotional decisions. That support can be worth more than the difference in fees, particularly for larger portfolios and near retirement.
Coordination. Advisers work with your accountant and lawyer on tax, structures, wills and powers of attorney. Our guide to financial planners versus accountants explains how the roles fit together.
Accountability over time. An ongoing relationship means your plan is reviewed as laws and circumstances change, and someone knows your history when a major event happens.
What does each cost?
Robo-advice is usually the cheapest form of managed investing, with fees charged as a percentage of your balance. That makes it attractive for smaller balances, but the fee grows as your balance grows.
Human advice costs more, reflecting the time involved and the broader scope. Fees are typically fixed or based on complexity rather than a pure percentage of assets. For a large portfolio, or for decisions with significant tax, Centrelink or estate implications, the value of good advice can outweigh the cost. Our guide on how much financial advice costs in Australia covers typical structures.
Your super fund may also offer free or low-cost advice about your account. Our guide to intra-fund advice explains what that covers.
When robo-advice may be enough
A robo-adviser can be a reasonable choice when:
- you are building wealth from a modest starting balance,
- your finances are straightforward, with stable income and manageable debt,
- your main goal is long-term, diversified investing,
- you are comfortable staying invested through market falls without support, and
- you do not have major life events or complex structures to plan around.
When a human adviser is likely to be worth it
A human adviser usually adds more value when:
- You have a larger sum to invest, such as an inheritance or business sale. Our guide on what to do with $200,000 shows how many decisions are involved.
- You are approaching or in retirement, where super, the Age Pension, drawdown strategy and estate planning interact.
- You are going through a major life event, such as separation, a new child, redundancy or the death of a partner. Our guide on when to see a financial adviser covers the common triggers.
- You use or are considering trusts, companies or an SMSF.
- You know you are likely to react emotionally to market falls, and want someone to talk to before acting.
Using both
Digital and human advice are not mutually exclusive. Some people start with a robo-adviser while building wealth, then engage a human adviser at a turning point such as buying a home, having children or approaching retirement. Others use a human adviser for strategy and structures, and a low-cost digital platform for part of their investments.
The important thing is to be clear about what each service is and is not doing for you, so nothing important falls through the gaps.
Questions to ask any advice provider
Whether you are considering a robo-adviser or a human adviser, ask:
- Is this general advice or personal advice?
- What does the advice cover, and what does it not cover?
- What are all the fees, including fees on the underlying investments?
- Who holds the licence, and how do I make a complaint?
- What happens if my circumstances change?
Our 15-question checklist for financial advisers includes further questions, and our guide to AFCA and the Compensation Scheme of Last Resort explains what protection you have if something goes wrong.
Where professional advice adds value
Technology has made investing cheaper and easier, and that is good for consumers. But the most important financial decisions are rarely about which ETF to buy. They are about how much to invest at all, where to hold it, how it fits with your super, debt, tax and family, and what to do when circumstances or markets change.
A human adviser can help you answer those questions, build a plan that connects them, and stay with you as your life changes. Where a digital solution suits part of your situation, a good adviser will tell you.
If you would like advice that looks at your whole financial picture, our financial advice team in Adelaide can help. You can also read our guide on what to look for when choosing a financial planner in Adelaide.
Frequently asked questions
What is robo-advice?
Robo-advice is financial advice delivered through an online platform using algorithms. Typically, you complete a questionnaire, the platform recommends a portfolio based on your risk profile, and it then manages the portfolio for an ongoing fee. Most robo-advisers focus on investment portfolios rather than broader financial planning.
Is robo-advice regulated in Australia?
Yes. Robo-advice providers must hold an Australian financial services licence or be authorised by a licensee. Where they provide personal advice, they must act in your best interests, and ASIC requires them to monitor and test their algorithms and have suitably qualified people overseeing the advice.
Is robo-advice cheaper than a financial adviser?
Usually, yes. Robo-advisers generally charge a lower ongoing percentage fee because the process is automated. However, they typically provide a narrower service, focused on investments, and do not include advice on super strategy, debt, tax structures, Centrelink or estate planning.
Can a robo-adviser help with retirement planning?
Some provide retirement projections or digital tools, but most do not provide comprehensive retirement advice. Retirement planning usually involves super, the Age Pension, drawdown strategy, tax and estate planning together, which generally requires a human adviser.
Can I use an AI chatbot instead of a financial adviser?
AI chatbots can be useful for learning and preparing questions, but they are not licensed financial advisers. Their answers are general information, they are not subject to the best interests duty, they may be out of date on Australian rules, and you generally cannot take a complaint about their answers to AFCA.
Can I use robo-advice and a financial adviser together?
Yes. Some people use a robo-adviser while building wealth and engage a human adviser at major turning points. Others use an adviser for strategy and a low-cost digital platform for part of their investments. The key is to be clear about what each service covers.
What happens if a robo-adviser gives me inappropriate advice?
Licensed robo-advice providers must have an internal complaints process and be members of the Australian Financial Complaints Authority. If your complaint is not resolved by the provider, you can take it to AFCA at no cost.
General advice warning. This article contains general information only and does not take into account your objectives, financial situation or needs. It describes the general nature of digital and human advice services and is not a recommendation about any particular provider or service. No digital advice provider is referred to. You should consider whether the information is appropriate for you and seek personal financial advice before acting on any of it. Money Path Pty Ltd is a Corporate Authorised Representative (No. 001306822) of Australia National Investment Group, AFSL 522028.
