When finding good financial advice is outside your budget, important questions about goals and risks can become hard to manage and execute. Buying based on recommendation means that your needs are met through a wider range of more realistic choices, and a realistic assessment of what your money can do gives you more protection and certainty, but like most things it comes at a price.
Sydney startup ProAdviser aims to slash the hefty price of financial advice with an online fund manager and investment adviser. The online platform manages all the trades, investment, and administration for the client.
“What we’ve essentially brought to the market is a quicker, cheaper and easier way to get investment advice,” said Nikhil Sreedhar, cofounder of ProAdviser.
Typically only one in five clients seek advice from a financial planner, with high fees being the main deterrent. Financial advisers are expensive, costing anywhere between $2000-$3,000 just to get an investment strategy for a $20,000 account. With Sreedhar and his cofounder Schuman Zhang’s experience working in the industry, they figured out a way to scale the entire financial advice process online.
“We’re looking not to compete against financial advisors but actually to work along with them and enable the remaining four out of five clients that don’t get advice to actually have that opportunity as well,” said Sreedhar.
ProAdviser will only cost $0.64 per day for a $20,000 account to be professionally managed, making it affordable to people who would not normally consider seeking financial advice.
ProAdviser was first conceived as a way for the cofounders to help friends buy their first apartment. They then saw that a lot of people were stuck on saving and didn’t have the luxury of affording a financial planner.
This form of ‘robo’ financial planning practiced by ProAdviser has become big in the United States, but Australia is just catching on to this new marketplace initiative.
With ProAdviser customers login to the platform where they are asked a series of question about their goals, whether they be saving for a house, car, holiday, or investment property. The goals help determine what the client wants to achieve from their investment and accordingly ProAdviser has algorithms that recommend and risk adjust to suit the client’s portfolio.
“It takes into account their appetite for risk, the type of investing they want, and optimises and investment strategy for them,” explained Sreedhar.
Once the client is satisfied with the advice, they can choose to accept the investment strategy, where they will then receive a ASIC-compliant statement. An automatic message is sent to the brokerage account provider and the customer is directed to deposit the money into that brokerage account. The account is placed under their name and the system starts trading the shares and the investments for them.
Clients can also accelerate the growth of their investment. If saving for a house, a ProAdviser Lending Manager will help clients secure the right mortgage for no additional cost once the deposit goal is reached.
With the fintech space heating up in Australia, clients are turning away from the traditional financial planners and increasingly looking for end-to-end solutions that are low cost and hassle free. Sydney in particular has been developing a hub of fintech, which has grown over the last 18 months.
Firms such as NAB, AMP, and Yellow Brick Road are among the few established companies that have launched online investment services. A number of fintech startup companies including ProAdviser are now also grappling for customers that have considered, yet never sought financial advice.
ProAdviser is based in Fishburners in Sydney and officially launched two weeks ago. Since launch the customer feedback has been positive with clients accounts opened and serviced all in 20 minutes, whereas this process would typically take seven to ten days for a financial adviser.
The company is completely self-funded and is looking to raise a seed round that will carry them through the next 12 months. At this stage ProAdviser are already looking towards improvements and additional features. The startup expects to open up a superannuation portal to give millennials greater control on investing their superannuation funds.
Image: Schuman Zhang and Nikhil Sreedhar. Source: Supplied