The digital advice provider’s head of partnerships for Australia and New Zealand, Graeme Brant, said by setting up a digital advice offering in such a manner that the adviser was providing factual information only to the client, advisers could potentially implement a low-cost offering to service clients who could not afford personal advice.
“You can actually provide some quite comprehensive wealth services without crossing over into personal advice,” Mr Brant said.
“If you come in and I’m not asking you any questions or getting any information from you, I show you a supermarket shelf of investment opportunities and you completely self-direct and say well that [portfolio] looks interesting to me, you can remain in the camp of general advice, and of course the cost of providing that is a whole lot lower.
“If I was to say to you ‘do this risk profiling questionnaire because I want to know where to put you’, then I’m starting to get into personal advice and the cost of SOAs and that sort of thing and it’s hard to provide that type of advice at [a lower] price. Whereas remaining in general advice can then be at the lower end of the price spectrum.”
Quantifeed chief commercial officer John Robson added that the Asia-based firm had received legal advice that its digital platform would fall under the definition of general advice in Australia.
He said the group had launched a number of recent partnerships with Asian financial services organisations including Singapore’s DBS Bank and Taiwan’s Cathay United Bank, with advisers in these markets facing similar issues as their middle class swelled and the traditional model of advice became less accessible and affordable.
“What these organisations are realising is that there is an opportunity in the vast numbers of customers they have who don’t warrant a personal advice relationship, to still give them guidance on what they should be doing with their wealth,” Mr Robson said.
“If you look across Asia, wealth is growing very quickly, it is growing most in the mass affluent area and if you take the traditional model of the adviser giving each one of them a game of golf every year and a bottle of red wine, there’s not going to be any economics of scale in that.
“The only way to get to that vast number of customers that are going to need wealth management advice and sensible portfolios to invest in so they can reach their retirement with dignity, you’ve got to employ technology. That’s the awakening that’s coming.”
Guys look at wealthconnect.com.au. this is IOOF robo advice, and solution to all problems. You can get this for 800 per month as IOOF is building and funding this for all Australians to help them.
It can’t be both general and advice. You can give factual information but as soon as you ask questions it is advice and therefore not general.
Conduct is not “general advice” just because you call it general advice. If in practical terms you consider just one or more of the client’s circumstances, needs or objectives – or a “reasonable person” might expect the provider to have considered one or more of those matters (section 766B(3)(b) of the Corps Act. then it becomes “personal advice” irrespective of you you wish to describe it.
A reasonable person in this context would be ASIC, FASEA oh! and do not forget AFCA.
For those who do not understand this concept – good luck!
“General Advice” is a legal loophole exploited by scoundrels such as mortgage brokers selling insurance, union super fund call centres recommending rollovers, and “fintechs” selling dodgy investments. “General advice” needs to be banned. There should only ever be regulated personal advice, or factual information.
And there’s fairies at the bottom of my garden. No idea.
It’s busing these Digital Advice providers thinking they can skate so close to real advice and avoid any real compliance.
Combined with the fact that most consumers aren’t knowledgeable enough to self direct to start with.
Does anyone know of a financially successful Digital Advice business in the world ?
I’d be interested to hear ASIC’s lawyers’ opinion vs the robo-advice CEO’s lawyers’ opinion on this
This is why digital advice has bad wrap, it is always seen as trying get around advice rather than embracing personal advice.
I agree the market here needs digital advice as part of the offer to the masses but it needs to be compliant and personal even when limited in scope, otherwise it is just product sales dressed up as general advice.
If an adviser went down this path, they will be in breach of FASEA Code of Ethics Standard 1. Good luck circumventing personal advice laws.