Among the most challenging issues facing the advice profession is that in the next few decades we are expecting to be hit by a ‘Silver Tsumani’ of retirees, and there are not enough professionals to service them.
Boosting the number of practitioners within the profession to meet this demand is one solution, however one that is starting to dominate conversations is the digitalisation of advice in order to create efficiency.
A report released by the Financial Services Council (FSC), based on analysis by CoreData and Borromean Consulting, found digital tools are emerging as an accessible entry point to financial advice, particularly for those who were previously unengaged with the sector.
However, while in other professions fears about digitalisation, particularly the proliferation of artificial intelligence (AI), replacing real workers persist, the FSC has found that digital advice is an enhancement to the advice process, rather than an alternative.
“Digital advice is not pursued as an end in itself. It is framed as part of a broader service ecosystem, supporting member decision-making across accumulation, transition and retirement,” the report states.
“Financial advice businesses are not, for the most part, deploying consumer-facing digital advice. They are digitising the advice process itself, using technology to improve efficiency, consistency and client experience within an adviser-led framework. Human judgement remains the organising principle.”
For retirement advice, this means people who might otherwise not engage with advice due to perceived obstacles such as costs are now able to reach planning that is more general in nature, either resolving the issue or emphasising the fact that deeper, human-oriented advice is needed.
“Stakeholders observed that digital engagement helps surface need earlier, supports more effective triage of advice demand and encourages re-engagement among consumers with prior advice experience,” the report states.
“Viewed together, the evidence suggests that digital advice tools function as an early-intervention and continuity layer within the advice ecosystem. Their value lies not in replacing professional advice, but in maintaining connection and momentum as consumers move between engagement states.”
FSC chief executive Blake Briggs echoed this sentiment: “Digital advice is complementing traditional advice by meeting Australians where they are – providing simple, accessible guidance that can scale with their needs over time.”
Among Australians aged 55 to 59, digital advice users were more than three times as likely to seek financial advice within the next 12 months compared with non-users (44 per cent versus 13 per cent).
This pattern extended across different advice needs. For those concerned about having enough to retire, 28 per cent of digital users said they intend to seek advice within a year, compared to 11 per cent of non-users. Over a longer time horizon, this rises to 52 per cent of users planning to seek advice, versus 34 per cent of non-users.
However, the issue from this will be directing clients and pre-retirees to the correct digital advice – that which is overseen and approved by a living breathing adviser.
Large language model AI tools such as ChatGPT are increasingly being lent on by some consumers, with Vanguard’s global chief economist Joe Davis telling ifa in February that the aforementioned tool is “probably the largest provider of financial advice in the world”.
Despite this, the FSC highlighted that its research indicates confidence in retirement advice grows significantly when it’s a human providing it.
“As decisions become more consequential, confidence – not access – becomes the limiting factor. Human judgement provides reassurance at the point where digital tools alone are no longer sufficient,” it said.
As these debates around digital advice in the retirement world continue, however, the financial reality for future and current retirees is one of complexity and uncertainty: an increasingly confusing super annuation landscape, ever rising cost of living and global uncertainty is keeping retirement confidence low and anxiety high.
Advice remains probably the best tool in raising confidence, but it still remains elusive for many, with solutions such as digitalising parts of the process to enhance advice while still funnelling clients to in person sessions a step in the right direction to fixing this problem, according to the FSC.
“Viewed together, the evidence suggests that digital advice tools function as an early-intervention and continuity layer within the advice ecosystem. Their value lies not in replacing professional advice, but in maintaining connection and momentum as consumers move between engagement states.”
