The free service – NAB Prosper – will be accessible through customers’ online banking accounts and provide “personalised” advice on super and insurance, and possibly on debt, cash flow, investments and estate planning in future releases, the bank said.
The story generated concern from commenters on the ifa website, who feared NAB’s new platform is the latest step in an industry-wide move that would replace financial planners with automated advice services.
“All of the big product companies are gradually taking advisers out of the picture, and switching to direct distribution methods,” according to one comment on the ifa website.
Another commenter said: “Spin it any way you like, but this is a direct advice play. You may like to dress this up as a lead funnel for advisers but we know you are testing this so that you can sideline face to face advice in the future.”
However, not all advisers are worried.
Paramount Wealth Management principal Wayne Leggett told ifa that robo-advice services are only a threat to businesses that solely offer product recommendations and not strategic advice.
“If clients can do themselves what you’ve been offering, then they’re not going to talk to you and, more importantly, they’re not going to pay you,” Mr Leggett said.
“If [clients are] just trying to look for options, they could always get that online. What you want someone to do is say, ‘OK, I know what the different options are but how do they compare and what’s the best way for me to proceed?’
“If a machine or technology can do what you’re doing then that’s a threat. But if that machine or technology can assist you in what you do for your clients then it’s actually an opportunity to improve your services.”
At least, that is what NAB has said is the goal.
In a statement yesterday, the bank said NAB Prosper is designed to prompt the 80 per cent of Australians who do not use a financial adviser to start the conversation. It also hopes advisers will take advantage of the new platform by capitalising on its efficiency.
“Allowing people to see their current financial situation has the ability to trigger a conversation with an adviser,” NAB said.
“Advisers benefit from this by being able to capitalise on changing customer segments and deliver targeted, relevant advice simply and efficiently.”
[quote name=”Adrian Totolos”]The issues are:
(3) The SFL product claims $2 billion dollars from captured clients on WBC and SGB clients. The super money was supposed to come from the $12.7 billion dollars (then – 2007) held at the ATO. The CBA product ( Essential Super) has very little funds under admin ( less than $50 million). Most CBA products are sold through CFS and Advisers. The FUA for CFS is over $90 billion. It is noted that ANZ and NAB both have direct products with little FUA. The Suncorp product has very little FUA, from captured clients on a very small personal client base, centred north of the Tweed.
Might want to check your FUM figures Adrian. The Colonial Direct product (Colonial Essentials) had net flows of over $700m. ANZ Smart Choice had net flows of over $500m.
Why wouldn’t the banks go direct? they have a massive existing client base to market to. The costs are cheap relative to the adviser distribution model. From a business perspective you can not blame them.
Steve the flipside of robo advice is commoditisation. The big instos will fight eachother over this space driving the prices down so it remains a questionable business strategy. Also arguing that the majority of the population will self direct their financial planning decisions is also a debatable premise. Financial planning is a lot more complex than stockbroking. The more likely future is that the big instos will play themselves out of the more profitable advice and service sector. The big winners will understand customer segmentation and target clients that value personalised advice and service.We have lost very few clients and keep obtaining referrals – not really a sign that the market is changing.
The issues are:
(1) Australians with either Super or Investment or both go through an Adviser sold product.
(2) Direct products started 10 years ago with telephone sales. There are large start up costs associated with this style of sale.
(3) The SFL product claims $2 billion dollars from captured clients on WBC and SGB clients. The super money was supposed to come from the $12.7 billion dollars (then – 2007) held at the ATO. The CBA product ( Essential Super) has very little funds under admin ( less than $50 million). Most CBA products are sold through CFS and Advisers. The FUA for CFS is over $90 billion. It is noted that ANZ and NAB both have direct products with little FUA. The Suncorp product has very little FUA, from captured clients on a very small personal client base, centred north of the Tweed.
(3)Super is seen as a domain to the well off by the Federal Government and Social Security Groups. The issue is a Unemployment rate of 6.1% much greater than 5.2% and much greater than 4.8%. If we all work and the employer pays SGC/Award to the super fund, the federal Govt will have less Pension liabilities in the year 2035 and greater. the tax burdon is being carried by FTE 40 year olds who pay for themselves, their parents and their children as well as the 6.1% on the NewStart.
(4) The tax grab from superannuation via greater contribution tax revenue and the issue of untaxed investment income for the pension phase as well as the issue of Franking Credits being passed to the investor / fund for claiming back from the ATO. The FUM from Superannuation funds are being sort by State Liberal Party Govts to bail them out of Treasury black holes. Fund Trustees beware.
Adrian Totolos.
Business Analyst.
A brilliant disruption from NAB? Who would have ever thought it? Wayne Leggett hit the nail on the head … if your not innovating then your are at risk. This NAB initiative will take care of the easy advice … BUT it’s what comes next that will really decimate the advice market! And, the beautiful irony is that excessive ASIC regulation of financial advice and ‘protecting the consumer’ played a major role in restraining innovation – to such an extent the industry will finally fail! Don’t you just love the ‘nanny state’!
This robo advice will work and will be more than adequate for the MAJORITY of the population I’m sorry to say. You can deny this, justify all you like but as the tech savvy retirees & many other investors embrace technology, the old tech dinosaur financial planners (currently fleece via over charging and excess fees all the while justifying it under the “fee for service” mantra) will die a slow death. Better get use to it people, your beloved FPA has caused this and will ultimately be the director of doom for your business. No amount of education or courses will save your business. Just like stockbrokers denied online platforms would impact their business you can do the same but later discover your receptionist is earning more than you as more and more of your clients desert your business to save money from you motherhood statements and hand holding. Sorry but this will happen as robo advice takes off, booms & gets better and better each year. Your options are to sell now while you can and some other fool thinks this won’t happen or drop your fees substantially and create a reason for them not to leave. Handholding and simple TTR strategies won’t cut it sorry.
Isn’t it about time that NAB and all the big instos and industry super funds FESS UP. They are all in the business of product manufacture and direct marketing and their employees are there to flog the mothership product. This will provide clarity to the public and ensure that regulations are designed to protect clients from the limitations of this product centric focus and the absence of personalised advice and service. It will also ensure that those in the personalised advice industry are separated and have their own voice at the regulatory table. And finally it will empower the advice industry to set themselves up separately from the instos rather than act as their distribution channel.Game on.
A question for Mr Hagger, the chief proponent of nil commission. Will NAB owned AFSLs be sold to Nippon Life.
My belief is ALL the banks want nothing to do with Personal advice anymore-too expensive to pay aggrieved customers- and payouts hit the share price
NAB will sell Direct Style inferior products to robo “customers ” aided and abetted by the champion of consumers ( you know them as ASIC ) on a GENERAL ADVICE BASIS. Banks cant be sued, never pay a claim
ASIC MUST immediately ask for the Corporations Act to be amended to ban GENERAL ADVICE as anti consumer
Pigs might fly!!
PLEASE – if you have not done the Adviser Survey floating around the industry please do so URGENTLY
I couldn’t agree more with Wayne, as long as they keep focusing on product the “Advice industry” will keep on thriving….
I’m a Financial Adviser not a Financial Product provider so the gap to me, continues to widen.
Firstly, congrats to NAB’s spin team for making this all sound a lot grander that it is and will be. Let’s all wait and see if and why NAB will be successful in this, which I predict they won’t and that this will be more a white elephant than a panacea for all the ills of bank-delivered advice. And why do I think that? Well, my clients are a pretty grounded lot and their feedback to me on robo advice is that they’ll never consider it a replacement for relationship-driven, personalised strategic advice.