A roadmap before investment journey


There are now more automated investment providers on the market than ever, targeting the 80% of Australians who are not seeking advice from financial planners. While a good tool to have for first time investors, most of these ‘robo-advisors’ tend to fail at taking into account the bigger picture of a client’s financial situation, for instance, if one has lifestyle debts.

A sensible thing to do first then, before embarking an investment journey (or any journey for that matter), is to develop a roadmap including where you are now and where you are heading.

"Until you’ve got the complete context around someone’s situation, you can’t even get close to acting in their best interests because you don’t know their situation … they [robo-advice platforms] are great tools for getting people to start thinking about savings and investing, but should they [clients] be doing that right now? " as Map My Plan founder Paul Feeney explains to financialobserver (read full article here).

He argued it was important to first help clients develop a roadmap of their ability to manage their finances – a metric Map My Plan refers to as the “financial fitness index” (take your own financial fitness test here) – to help them adequately determine investment objectives, prepare for unexpected life events and educate them about the importance of savings along the way.

"At its core, financial planning is about capital allocation; it’s about where do [clients] allocate their lump sum capital or surplus monthly capital to make sure they can lead the life they want with the goals, dreams and aspirations that they’ve got.” he said.

So the bottom line is, automated investment providers are unlikely to close the advice gap in Australia’s broader population, until they start to adequately engage and educate clients, on the simple principles like paying off your debt, before start considering investments.

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