We discuss the idea of using a ‘robo-advisor platforms like Six Park and Stockspot to handle our investments.
We explain how they work, their investment strategies and fees, the pros and cons of using a robo-advisor compared to investing by yourself, and much more.
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My thoughts on a behavioural trap I see in the FI community, how to recognise it and how to fix it. Far more common than you might think, and it can prevent you from enjoying the wonderful wealth you’re building.
Lizzie changed her career, moved location, sold her home and switched investment strategy. Now she’s looking to semi-retire in her 30s.
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Fantastic, fair and accurate summation guys.
Another issue with those to is is that your cash will sit there earning next to nothing until it hits the ‘ buy’ threshold. Additionally you have no say on the day/ time of day they purchase.
Now that Vanguard Personal Personal has just introduced auto-invest function for it’s managed funds (ETFs and shares on its way 2022 as well) for no fee, it beats the pants off any if the options discussed today.
I do Vanguard managed funds ( a per small preference to ETFs despite the very small tax inefficiency) and the new auto invest function is the icing on the cake. The only fee is the normal spread and the underlying MER.
Thanks Phil! And it’s good to hear Vanguard has improved this offering. We’re both biased by our own selections of course, but I don’t really agree with a few of your arguments.
Given most people are likely to be investing each month anyway, there would be something like a couple-week drag of ‘cash earning nothing’ if that, which we both know amounts to basically zero. Choosing what day/time of day to invest… how does this help?
So at the moment there’s autoinvest for managed funds… but how exactly does that beat the pants off autoinvest for ETFs? The higher tax would be a bigger drag than the savings from brokerage and (possible) cash drag intra-month. Plus, this inefficiency of managed funds is on the whole portfolio and gets bigger over time, whereas the brokerage and cash drag of ETFs remains very small.
Affecting this also is investment amounts, portfolio size, and so on, but I think in most cases the more efficient option is still autoinvest with cheap brokerage and ETFs. Definitely a stretch to say ‘beats the pants off any of these options’ lol.
Apologies Dave. My comments must have come across grumpy- not my intention.
Comparing the fees of Stockspot / Sixpark to Vanguard PI certainly leaves Vanguard PI platform well out in front. I should have been clearer that I was not referring to Pearler etc.
I also should have prefaced that for those investing smaller amounts then at least these amounts are at least immediately in the market using a managed fund which they are using Stockspot or Sixpark.
I know we differ on managed funds versus ETFs however it suits my investment brain ( avoids triggers).
I was listening to the podcast whilst gardening and my first reply was via a gloved finger on my iPhone (LOL). In future l’ll be more patient and construct a more detailed response that does not sound unintentionally challenging.
No worries at all man! I also misunderstood as I thought you were also comparing to Pearler autoinvest.
Certainly, the managed fund approach is solid and I fully get the psychology behind it. The fee structure definitely beats robo-platforms for the keen investor, no doubt. And by the way, I’m honoured that you let FIRE & Chill be a part of your gardening experience, haha 😉
I think that at the time Stockspot and Six Park launched they probably made reasonable sense for a lot of investors who wanted to be able to invest a small amount of money in an easy to implement set and forget strategy that reflected their risk profile.
But with the products that have come out since like the various diversified ETFs and auto invest features from the likes of Vanguard or Pearler, there really isn’t much of a case for anyone to start or continue to put money into them when much cheaper and as easy to use products are available.
I also really dislike the term robo-advisers, because all these providers are doing is giving you an asset allocation. There’s no strategy around tax minimisation or budgeting or estate planning or asset protection or insurance or super or anything like that, it is purely at best asset allocation, based on you filling out a risk profile questionnaire.
Appreciate your thoughts AHF. Sounds like we’re in complete agreement 🙂
I also found the word ‘advisor’ confusing – at first I thought I must have been missing something after I couldn’t find what kind of advice they were offering. But turns out it’s mostly the risk assessment, which is a good idea in itself, and it’d probably be possible for a broker to implement that if people want that extra guidance in the beginning.