The Australian Digital Advice Association (ADAA) – which is preparing to launch soon – aims to showcase how digital advice could enhance consumer protection, said George Haramis, one of its founders.
Mr Haramis, who is also CEO and co-founder of Australian fintech moneyGPS, said ahead of the Adviser Innovation Summit 2023 that he invited consumer groups to speak with the ADAA about its objectives and functions in a recent ifa podcast.
“We all know that there’s been a lot of feedback from consumer groups about some of the recommendations made in the Quality of Advice Review (QAR),” he told ifa.
“One of our goals is to alleviate any concerns consumer groups have about the recommendations made by reviewer Michelle Levy in the QAR. I think at some stage, the founding members of ADAA will be presenting our digital platforms to the Minister of Financial Services, Stephen Jones.”
The QAR did not delve into digital advice in detail but suggested that digital advice providers be exempt from the duty to act in the best interest of clients, and instead be subjected to a new duty to provide “good advice”.
A new report by AMP revealed that in recent times, there has been a “flurry of activity” in financial advice solutions and digital advice, driven by several factors including QAR and declining adviser numbers.
Mr Haramis said that the duty to provide good advice requires advisers to provide advice “that was appropriate at the time”.
“From our perspective, single topic advice looks at a person’s situation at a specific point in time and provides appropriate advice in line with the clients’ requirements,” he said.
“Based on our research with focus groups, it’s what most people want in the majority of cases. They want specific advice on a specific issue at a point in time. In that respect, the advice is appropriate and it would be in the best interest of the client at that point.”
Delivering “good advice” may not cover every client circumstance, but that is applicable to comprehensive advice, Mr Haramis noted.
“I would argue that for the majority of Australians, single topic advice is more appropriate at a point in time,” he said.
The ADAA was conceptualised by founding members fund manager abrdn and three fintech firms, with encouragement from Mr Jones, and QAR reviewer Michelle Levy.
At the Adviser Innovation Summit, the founding members will delve into the launch, detail how digital advice aligns with QAR recommendations to deliver advice within safe parameters, and why a hybrid model of combining human adviser expertise with digital tools and “robo” models could be the answer.
Objectives of ADAA
The association’s goal is to create a unified and coordinated voice for digital advice, Mr Haramis said.
While some organisations focus on developing technology-based advice solutions or robo-advice, others like moneyGPS deliver strategic digital advice, he explained.
“It’s not to say that those services haven’t got a place within the advice community,” he stressed.
“It’s just to identify who provides digital advice. If there are other players within the organisation, we want to know where they sit. We will most likely have various levels of membership.”
Another goal is to improve industry policymakers’ understanding of what digital advice is, and how it could be used to help clients in a cost-effective manner, Mr Haramis added.
Alongside this, the association aims to demystify what digital advice is from a client and adviser perspective.
“I’ve mentioned before that advisers should be viewing digital advice as their new best friend because it can help them engage with clients in a cost-effective, timely, interactive, and personalised way, particularly for those who may not be able to afford comprehensive advice,” Mr Haramis said.
‘Keep an open mind’ on digital advice
Mr Haramis concluded that digital advice is the next step in the evolution of an advice practice and urged advisers to embrace it.
“I would encourage advisers to keep an open mind about digital advice because it could change your whole business,” he said.
To hear from the founding members of the Australian Digital Advice Association about the launch and its aims to drive regulatory change while enhancing the delivery of digital advice solutions, come along to the Adviser Innovation Summit 2023.
It will be held on 8 June at the Great Hall, University of Technology Sydney, and 15 June at Grand Hyatt Melbourne.
Click here to buy tickets and don’t miss out!
For more information, including agenda and speakers, click here.
