In the USA robo-advisors are computer programs that create and manage an investment portfolio. Forbes calls them robo-advisor version 1.0 and says that “version 2.0 will likely evolve toward the provision of investment and comprehensive holistic financial advice geared to the expressed needs and wants of clients…. In Version 3.0, process expertise will be added to the broad-based technical expertise of Version 2.0 to create something that looks and feels like a personalized family office meaning more people with less wealth will get better advice from fewer professionals.”

The current Australian legal distinction between general advice and personal advice is based on firstly whether personal information is collected and secondly whether a recommendation or statement of opinion is made.

Although the Murray Financial System Inquiry Report recommended a new name for general advice how will consumers regard the product of robo-advisers?

Will the providers of robo-advisers need a financial services licence?

In a recent speech on digital disruption ASIC Chairman Greg Medcraft said:

“Traditional business models are being disrupted by new digital strategies at an accelerating pace. This change is being driven by innovations in mobile, video and networking technologies.

Innovators that were once the disrupters are now facing disruption themselves. For example, alternative payment systems, like PayPal, are facing potential disruption from crypto-currencies and prepaid cards.

Other examples of digital disruption in the financial services sector include peer-to-peer lending, crowdfunding and robo-advisers – and, in or markets, high-frequency trading and dark liquidity.”

Technology has already overtaken the regulatory response.