In an era where consumers trust Facebook and Google to manage their money before a financial institution, the advice sector needs to start collaborating more effectively with technology companies or risk becoming “pretty irrelevant pretty quickly”, Netwealth’s Matt Heine has said.
Speaking on an XY Adviser webinar yesterday, joint managing director of Netwealth Matt Heine discussed his recent study tour to Silicon Valley in the US, saying some of the findings should set off alarm bells for the Australian financial advice sector.
“There were two scary things that came out of the trip. The first one was that – no longer are our clients actually comparing our services to other financial firms, rather they’re saying ‘how does the service you’re delivering me compare to that of Amazon or Facebook or all the other services that I interact with every day?’”
“Amazon is talking about developing a button that sits next to your washing machine that you press and washing powder arrives at your home the next day – how is the financial services sector in Australia going to keep up with consumer expectations that consider that as the norm?”
If the advice industry is not able to build a market that addresses this issue and open up communication with innovative technology firms, “we’re going to become pretty irrelevant pretty quickly because that's the new expectation of how a service is delivered”, Mr Heine said.
“The other scary fact that came out of the trip was that the majority of Millennials and X, Y over in America would trust Facebook or Google to manage their money before a bank or an institution,” he said.
According to Mr Heine, the new frontier in financial advice is going to be a focus on artificial intelligence for driving higher returns, managing processes and engaging with clients.
Mr Heine said the way forward for the advice sector is acknowledging that financial services businesses are not going to master technology, rather technology firms are looking at financial services.
“For the financial advice industry it’s going to be about looking at how can we partner with these firms who are doing this really cool stuff,” Mr Heine said.
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