The rise of Robo-Advisors: how automation is reshaping Australian wealth management

The landscape of financial advice is constantly evolving, with investors increasingly turning to automated investing and robo-advisors as cost-effective solutions for optimising their investment returns.

For those unfamiliar, robo-advisors are digital platforms that leverage artificial intelligence, algorithmic investment models, advanced analytics, and data science to construct and manage investment portfolios based on an individual's financial objectives—such as risk tolerance, time horizon, and goals.

The growing adoption of robo-advisory services is transforming the wealth management industry by delivering financial advice more efficiently and reaching a broader audience of investors. In this article, we’ll explore the origins of robo-advice, examine current trends, introduce the regulatory framework governing the industry in Australia, and consider the future of automated investing.

The origins of automated investing

Automated investing dates back to the late 20th century when computers were first introduced into financial services organisations. Initially, automation was primarily used for algorithmic trading, where large institutions employed complex mathematical models to execute high-frequency trades. While these systems were powerful, they were largely restricted to institutional investors with the necessary resources to operate them.

The rise of robo-advisors: bringing automation to retail investors

As computing costs declined and technology became ever more integrated into daily life, fintech innovators began offering robo-advisory platforms to retail investors in the early 2000s. These platforms provided algorithm-driven financial advice and investment management, enabling retail investors to access sophisticated portfolio management services without the high costs associated with traditional financial advisors.

This innovation democratised wealth management, bridging the gap between institutional and retail investors and making financial independence more attainable than ever before.

Current trends in robo-advising

While robo-advice adoption remains relatively low in Australia, where <10% of active online investors in the nation using robo-advice services, uptake is increasing as these solutions become an integral part of investment strategies for both retail and high-net-worth (HNW) and ultra-high-net-worth (UHNW) investors. Several key trends are shaping the evolution of robo-advising:

1. Hybrid advisory models – Traditional financial institutions are incorporating robo-advisors alongside human expertise, offering a blend of automated technology and personalised, face-to-face financial guidance.
2. Hyper-personalisation – Advanced robo-advisors utilise AI-driven insights that integrate financial market data with investors' digital footprints, tailoring investment strategies to unique financial goals, risk appetite, and life stages.
3. Diversified asset offerings – Robo-advisors are expanding beyond equities and fixed-income products to include alternative investments such as derivatives, real estate, private equity, and cryptocurrencies, broadening the scope of automated wealth management.

The Australian regulatory environment

With the rise of the automated digital advice industry, the Australian Securities and Investments Commission (ASIC) provided guidance in August 2016 through Regulatory Guide (RG) 255: Providing digital financial product advice to retail clients. This framework aims to ensure a level playing field among advice providers while prioritising consumer protection.

Key takeaways from RG255 include:

1. ASIC supports digital advice, recognising it as a low-cost and convenient option for investors.
2. Robo-advice providers must obtain an Australian Financial Services (AFS) licence or act as an authorised representative of an existing AFS licensee.
3. Since Australia’s regulatory framework is technology-neutral, the same legal obligations—including compliance with financial services laws, risk management, conflict-of-interest resolution, and human resourcing requirements—apply to both digital and traditional financial advice providers.

The regulatory framework for digital advice is expected to evolve as sophisticated algorithms and artificial intelligence become more embedded in financial advisory services. ASIC has urged robo-advice providers to ensure their governance frameworks keep pace with the rapid adoption of AI.

The future of robo-advice

As technology advances and investors become increasingly comfortable with automated investment strategies, several key developments are likely to shape the future of robo-advisory services:

1. Smarter AI and predictive analytics – Future robo-advisors will leverage even more advanced AI capabilities to predict market trends and mitigate risks, leading to increasingly optimised portfolios and investment strategies.
2. Expanding financial inclusion – Automated investing will extend its reach into underserved geographies and product markets, offering affordable and accessible financial solutions to individuals who previously lacked access to professional advisory services.
3. Legislative and regulatory framework refinement – The regulatory landscape, including ASIC’s RG255 and emerging AI data laws, is expected to adapt to ensure robust oversight of AI-driven financial advice.
4. Seamless integration into daily life – Robo-advisors will be increasingly integrated with personal AI assistants, everyday technologies, and smart interfaces, making investing a continuous and intuitive part of everyday life rather than an occasional, deliberate action.

Robo-advisors are revolutionising financial services by making wealth management more accessible, cost-effective, and efficient. As robo-advisory technology advances, investors can expect increasingly intelligent, personalised, and seamlessly integrated financial solutions. The future of investing is here—and it’s automated.

If your organisation is considering launching or expanding digital advising for your customers, our CGI Financial Services experts are here to help. With deep expertise in implementing and optimising robo-advisory platforms, we deliver seamless, high-impact solutions. This includes integration within CGI Wealth360—a platform that combines robo-advice with human expertise to create a differentiated, high-value customer experience. Get in touch to explore how we can support your digital advising outcomes.