You web browser may not be properly supported. To use this site and all its features we recommend using the latest versions of Chrome, Safari or Firefox

We are continuing to serve clients during the COVID-19 pandemic More Info.


‘Robo-advice’, also known as ‘digital advice’ or ‘automated advice’, is on the rise in Australia. Labels aside, it is the provision of automated financial advice using software algorithms, without any direct involvement from a human adviser.

Typically, once you are at a robo-advice website, you will enter some details, fill out a questionnaire, pay a fee, and then, with the click of button, you’ve got yourself a piece of tailored financial advice. All in the convenience of your own home and without once having to speak to a real person.

With only 20% of adults Australians currently seeking professional financial advice, many in the financial services industry see robo-advice technology as an opportunity to provide low-cost and convenient advice to those who might not otherwise seek it. ASIC supports the development of the robo-advice market and recently issued a draft regulatory guide with a view to encouraging the industry and new entrants.

But if you are a consumer thinking about getting robo-advice, what legal issues do you need to be aware of before clicking ‘Proceed’?

1. Know the adviser

Not all financial advisers are the same. Some may be restricted by their financial services licence to providing advice only about a limited range of investment options. For example, a robo-advice company might only give advice about investing in direct shares, managed funds, and nothing else.

Under the Corporations Act 2001 (Cth), the adviser must provide retail clients with a Financial Services Guide (‘FSG’) which includes information about what financial services they provide and the fees they charge. It is also a requirement that the adviser provide Product Disclosure Statements (‘PDS’) for the investments being recommended. The PDS will contain details about the nature of the investment and any significant risks. The FSG and PDS are usually available on, or can be requested via, the adviser’s website.

Although sometimes long and technical, it is essential for prospective investors to read the FSG and PDS(s) to know what they are getting into.

2. ‘Know thyself’

The legal obligations of a financial advisor to provide appropriate advice are often colloquially summarised as 1) “Know the client” and 2) “Know the product”. “Know the client” encompasses the legal obligation under the Corporations Act to act in the best interests of the client, including by taking into account their personal circumstances, needs and objectives.

By its very nature, robo-advice will only take into account what personal information the customer has inputted, through filling out online forms and questionnaires. These will be pro-forma, and may not necessarily ask you the right questions or give you scope to answer in a way which fully captures the nuance of your instructions.

Better robo-advice platforms will force you to seek less-automated advice if you input information which suggests the advice the service provides may be inappropriate. However, in any case, you should carefully review any answers or information you provide to the robo-advice program and any summary of those instructions in the Statement of Advice which it provides. If such information does not reflect your true instructions, you should consider seeking alternative financial advice.

3. Know what you don’t know

One of the benefits of obtaining advice from a high quality, human financial advisor is they will likely recognise deficiencies in your understanding of financial cases and educate you about what you need to know to make a fully informed decision.

With robo-advice, you are largely on your own. No one is going to ‘pull you up’ if you are thinking about making an investment which is inappropriate once viewed in light of your broader financial circumstances, or because you don’t know what other options are available (which might not be investments offered through a particular robo-adviser).

In a significant proportion of the legal claims against financial advisers we encounter, it is only after they have incurred significant losses, that an investor realises what was the true nature of the investments they made, or that there were better options of which they were never advised. With robo-advice, more than ever, investors need to do their homework, research the investments they are considering and have a reasonable working knowledge about different classes of investments, the associated risks and the process of obtaining financial advice itself. Reading the financial advice section of ASIC’s Moneysmart website is a good starting point.

If you have concerns about the financial advice you have received from your financial planner or adviser, contact us to speak to one of our experienced lawyers about your options.

The contents of this blog post are considered accurate as at the date of publication. However the applicable laws may be subject to change, thereby affecting the accuracy of the article. The information contained in this blog post is of a general nature only and is not specific to anyone’s personal circumstances. Please seek legal advice before acting on any of the information contained in this post.

Thank you for your feedback.

Related blog posts

Consumer and the Law
Banking Royal Commission legislation introduced

On 28 November 2019, the Government introduced legislation in line with the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The legislation is designed to provide further protections for consumers and small businesses and is set to be passed in early 2020. Below is an overview of the proposed legislation. Click here for a recap of the Banking Royal Commission from our Head of Class Actions, Ben Hardwick. Under the proposed legislation, mortgage brokers will be required to act in the best interests of consumers when providing credit assistance. That means where there is a conflict of interest between the consumer’s...

Gavel and weights two people talking resized
Financial Negligence
The Australian Financial Complaints Authority’s powers are being expanded for 12 months: Do you …

The Australian Financial Complaints Authority (AFCA) is responsible for providing consumers and small businesses with free and independent dispute resolution for financial complaints. AFCA considers complaints in relation to: These complaints were previously handled by the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal. The usual time limit for making a complaint to AFCA is 6 years from the date you became aware of the financial loss.[1] However, when a complaint has already been through the financial firm’s internal dispute resolution process, the time limit is reduced to 2 years from the date you receive response from the...

Finance Planning People Documents Resized
Financial Negligence
Online scams and the Financial Ombudsmen service

As our population ages, our vulnerable elderly people are increasingly falling victim to elder abuse perpetrated by adult children, family members, friends and carers. But older Australians are also increasingly preyed upon by fraudsters. The Financial Ombudsman Service (FOS) has recently published two determinations which consider whether the older person’s bank is liable for “allowing” them to transfer funds. In the first case (Case number 431342, 2 December 2016), the Applicant transferred $123,019 from his bank account to a fraudster who kept the funds. The Applicant claimed the bank should compensate him for his loss. FOS found, however, that the bank did not cause or contribute...

We're here to help

Start your online claim check now. Or, if you have a question, get in touch with our team.