Page 35 - Profile's Unit Trusts & Collective Investments - March 2025

History of Collective Investment Schemes

Vanguard Personal adviser Services and
Schwab Intelligent Portfolios are examples of
hybrid services; Betterment and Wealthfront
are examples of pure robo-advice platforms.
The advent of robo-advisers can be seen as a
logical progression from the risk capacity and
needs analysis software programmes that have
been used by financial advisers for decades.
Given the ubiquity of internet and broadband –
and an increasingly computer-savvy population –
a rapidly expanding segment of the investing
public feels able to complete such questionnaires
without assistance.
A robo-adviser platform typically requires
the investor to complete online risk-tolerance and risk-capacity questionnaires (see chapter 6) and
makes investment recommendations based on the investor’s responses.
According to the FSCA’s Fit and Proper requirements, robo-advice (or ‘automated advice’) is
defined as “the furnishing of advice through an electronic medium that uses algorithms and
technology without the direct involvement of a natural person”. In order to comply with the
Financial advisery and Intermediary Services (FAIS) Act, a financial services provider (FSP) that
provides robo-advice must employ at least one key individual who meets the FSCA’s competency
requirements. These include a technical understanding of the algorithms used in the robo-advice
process. An FSP using a robo-advice platform must monitor and review the automated advice
generated on an ongoing basis and ensure it is sound and FAIS compliant.
As more and more firms begin incorporating elements of robo-advice into their online services,
the lines between traditional financial advice and robo-advice may become blurred, especially
where robo-advice platforms provide access to human-assisted online services on a needs basis.

Profile’s Unit Trusts & Collective Investments — Understanding Unit Trusts 33