SEARCH
Robo-advisers struggling to turn a profit
Robo-advisers struggling to turn a profit
Due to low fees and the difficulty associated with gaining clients, robo-advice firms are finding it difficult to generate a profit, says QuietGrowth.
Dilip Sankarreddy, founder of automated investment platform QuietGrowth, said "no one is making any money" out of robo-advice.
Speaking to Adviser Innovation, he pointed out that in order to generate $500,000 in revenue, a robo needs to have approximately $100 million in assets under management (AUM).
Moreover, Mr Sankarreddy explained that in order to grow a robo's client base, constant investment needs to be made to enhance the tool.
"You need to build an even better product, and you need to spend money to get the word out," he said.
"You have to reinvest more to make the product good. We are speaking of millions of dollars here."
Mr Sankarreddy noted that high costs and small gains are the reality of robo-advice start-ups. This is not negative, "but a realistic perspective of what it takes to get there", he said.
He said his firm is "in it for the long-run" and is confident that with time and further investment, it will begin to generate profits.
According to Mr Sankarreddy, servicing existing clients is an additional expense.
"Even though we say that we are in the automated industry, people do call or email you. We have to engage with them and that costs money," he said.
Trust, he added, also needs to be established and maintained with clients. If the tool does not function seamlessly, trust is unattainable. This, again, requires constant investment.
Mr Sankarreddy pointed out that in order to grow a robo-advice firm's client base and the tool itself, external sources of capital must be found.
For the "kinds of goals" his firm has, he said venture capital will need to be considered.
Subscribe to our Newsletter
We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians
Your email address will be shared with nestegg and subject to our Privacy Policy
latest articles
OUR PLATFORMS AND BRANDS
- Accountants Daily
- Accounting Times
- Adviser Innovation
- Australian Aviation
- Cyber Daily
- Defence Connect
- Fintech Business
- HR Leader
- Independent Financial Adviser
- Investment Center
- Investor Daily
- Lawyers Weekly
- Money Management
- Mortgage Business
- Nestegg
- Property Buzz
- Real Estate Business
- Smart Property Investment
- SMSF Adviser
- Space Connect
- Super Review
- The Adviser
- Wellness Daily
- Which Investment Property
- World of Aviation
EVENTS AND SUMMITS
- Accountants Daily 30 Under 30 Awards
- Adviser Innovation Summit
- Australian Accounting Awards
- Australian Aviation Awards
- Australian Broking Awards
- Australian Defence Industry Awards
- Australian Law Awards
- Australian Space Awards
- Australian Space Summit
- Better Business Summit & Awards
- Corporate Counsel Summit & Awards
- Cyber Security Summit & Awards
- Defence Connect Budget Lunch
- Defence Connect DSR Summit
- Fund Manager of the Year Awards
- ifa Excellence Awards
- ifa Future Forum
- Investor Daily ESG Summit
- Lawyers Weekly 30 Under 30 Awards
- Lawyers Weekly Women in Law Forum
- Mortgage Business Awards
- New Broker Academy
- Partner of the Year Awards
- REB Awards
- Reinnovate
- SME Broker Bootcamp
- SMSF Adviser Technical Day
- Super Fund of the Year Awards
- Women in Finance Awards
- Women in Law Awards
- Accountants Daily Podcast Network
- The Adviser Podcast Network
- Australian Aviation Podcast Network
- Defence Connect Podcast Network
- HR Leader Podcast Network
- The ifa Show
- The Lawyers Weekly Show
- Mortgage Business Podcast Network
- REB Podcast Network
- Relative Return
- The Smart Property Investment Show
- Space Connect Podcast
PODCASTS
LEARNING AND EDUCATION
MOMENTUM MARKETS NETWORK
LINKS
STAY CONNECTED
Subscribe to the Adviser Innovation eNewsletter.
