Let’s call 2025 the year of digital advice: Otivo

Following Otivo’s partnership with Colonial First State (CFS) to deliver digital advice for CFS FirstChoice members, founder and chief executive of the tech firm Paul Feeney told ifa that Otivo is now in conversation with almost a dozen superannuation funds at the moment, as well as one of the largest licensees.

“We’re going to take this out to all of their hundreds and hundreds, if not over a thousand advisers, to enable them to give advice to people that they can’t offer their traditional face-to-face service to,” Feeney said.

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Wealth Data has shown that adviser numbers continue to hold ground around the 15,500 mark, but little growth is occurring. As such, the advice industry continues to seek out ways to address Australia’s pressing under-advice issue.

To this point, Otivo has expanded its capabilities beyond superannuation to provide a wider range of services. Even so, Feeney said digital advice is not at all intended to replace face-to-face professional advice.

“In December, we launched the advice modules around debt, and we’ll be launching building wealth outside of super investing and so forth later in this first half of the year as well,” he said.

“So, all of a sudden, you’ve got every aspect of someone’s financial life, and it’s down to the individual to drive the process, just by answering questions about this situation, and once you have that information, you can actually provide the advice and be proactive for them.”

As it stands, one of the biggest barriers to accessing a professional adviser is the high cost, however, Feeney said that Otivo and other industry stakeholders have a “moral obligation” to do what they can to help those that need advice to access it.

“Advisers are professionals, they need to be paid for their expertise, and there’s always going to be enough people for them to service, but I don’t think it’s right that the other 9 million households are left alone, and that’s where technology plays the role to enable individuals to start the process, and they take control,” he said.

“We have a moral obligation to give access to those 9 million households, and those financial services firms do, and that’s where we’re heading, and that’s why I believe this will become ubiquitous.”

AI in digital advice

Much like the rest of technology, it appears AI is set to play a key role in the future of digital advice, with Feeney stating that Otivo is currently in the process of testing such applications with plans to roll out AI on its platform in the next six months.

“We’re playing around with the prototypes at the moment, and it just comes down to making sure that it’s fit for purpose and remains compliant and lots of stuff and is of value to individual users, individual clients,” he said.

Feeney suggested that introducing an AI interface for users to communicate with will make advice more approachable for everyday Australians, helping them better understand their financial circumstances.

“We’ve got a platform already that looks at investment advice inside your super fund contributions, insurance, but also managing all your debts, and then looking at investments outside of super that we’re bringing in,” he said.

“Then all of a sudden, you have a little AI interface, whether it’s text or whether it’s talking, and individuals can choose how they wish to interact with it but then giving you that context.”

No need to wait for reform

Despite years of challenge at the hands of the government, Feeney suggested that the advice industry is now in a position to grow and thrive over the coming years.

“There’s a great deal of momentum here and I think the government and institutions are now really paying attention to the fact that the more people that have advice, the better off they are, the better off the institutions are going to be that provide it as well,” he said.

“For us, we are basically wanting to work with like-minded organisations who see the value in advice, who add value to their stakeholders, whether they’re clients or members, and essentially, let’s make sure another million households can get advice, and let’s go for the next million after that.”

While there is still no clarity on the timeline for tranche two of the Delivering Better Financial Outcomes reforms, Feeney said they are unlikely to impact the digital advice space in any significant way as the framework for the technology already functions within the current legislative framework.

“It may give greater comfort to management at financial services firms or super funds to embrace the technology where it’s going, because they feel more comfortable that the rules of the game have given them the ability to embrace it a lot more, and they don’t feel it’s taking on a risk,” Feeney said.

“Firms are conservative in this sort of space, given the reforms and everything else that have gone on in the past. But it just comes down to one question. It really comes down to: Are we better off keeping the status quo and not helping 9 million households or 90 per cent of Australians? Is the non-action more detrimental than the action of utilising the digital advice that exists now?”

He added: “So, let’s call 2025 the year of digital advice.”