Commonwealth Bank of Australia subsidiary ASB is testing the market for new, possibly robo-advice driven, direct-to-consumer managed funds platform aimed at helping parents save for their children.
If switched on, the ASB ‘MoneyTree’ platform – currently in beta-testing – would offer access to “high performing managed funds without the high minimum deposits”, according to the website.
“Moneytree is one of a number of early stage concepts currently being tested in the market by ASB’s innovation team,” a spokesperson for the bank said. “It is at experimentation stage and is helping inform the ASB product teams on what our customers are expecting and wanting from us.”
The MoneyTree test site is light on detail, however, it features a contribution calculator comparing estimated returns from a managed funds portfolio (based on the ASB growth fund seven-year 9.5 per cent annualised result) to savings account and term deposits.
For example, the calculator projects putting aside $200 per week into a fund for a child aged five would grow into over $266,000 by the time the reached 18 – almost $120,000 better off than investing into a bank savings account (at current rates).
The project has a whiff of robo about it, too, with the MoneyTree site claiming: “Whether your goal is to pay for your child’s higher education or contribute to their first home, we guide your investment decision to suit your goals.”
Robo-advice tackling personalised situations will not be legal until a Financial Markets Authority (FMA) exemption comes into force perhaps as early as the end of this month. (However, according to industry sources the FMA exemption was more likely to be finalised by the end of March.)
MoneyTree would likely serve as a distribution vehicle for ASB funds only but the model of lowering minimum investment amounts for direct investors via online platforms follows that of last year’s new entrants InvestNow and Sharesies (also in robo-development).
Across the ditch a comparable fractional fund investment offer, Acorns, has attracted more than A$150 million from clients who can put ‘spare change’ into a range of six portfolios backed by ASX-listed exchange-traded funds.
Last month Acorns Australia provider, Instreet, bought out most of the equity from joint-venture partner, and originator of the concept, Acorns Grow (US).
Under the deal Acorns Australia secured a perpetual licence from the US entity to use the underlying technology and “to operate in additional markets in Southeast Asia, including New Zealand, Indonesia, Singapore, Malaysia, Thailand, and Vietnam”, according to a release.
Acorns does not have a NZ offer in place.
MoneyTree also may never sprout, according to the ASB spokesperson.
“As with many alpha/beta sites and experiments MoneyTree may not go further than its current phase,” the spokesperson said. “While we assess customer feedback and interest MoneyTree has no managed funds directly attached to it.”