There are no longer enough advisers to meet anticipated demand in Australia post-COVID-19, but consumers aren’t willing to pay the large sums associated with comprehensive advice – meaning advisers need to look to digital solutions to round out their offering.
“Many of these Australians don’t have huge budgets for advice, they have no desire for full-scale service, and they don’t want to engage with advisers in the same way their parents did – so ‘best fit’ advice is not what it used to be,” said Six Park co-CEO Pat Garrett.
“Anything that allows advisers to better engage with these Australians today is a very attractive proposition and that’s where digital solutions come in. Today’s digital advice client could be tomorrow’s wholesale investor.”
But Six Park believes a number of “myths” around robo-advice – that it is not compliant with BID, that ASIC does not approve of it, and that it competes with traditional advice – are preventing advisers from integrating this digital solution into their practice.
“There is no competition there – in fact, when a human element is added to a service like robo- or digital-advice, the conversion rate of customers who actually implement the advice drastically increases,” Mr Garrett said.
“It’s both an exciting and challenging time for the industry. There is a lot for advisers to work through – there is no denying that – but there is certainly no red tape that’s blocking their way and some aspects of going digital could actually be much easier than first perceived.”
He also noted that regulators were supportive of scaled advice, recognising the importance of meeting different consumer needs.
“Their response has been to reiterate that scaled and digital advice should play a prominent role in providing services for the simpler needs of the mass market,” Mr Garrett said.
“Scaled advice services already have regulatory guidelines supported by ASIC and the federal government, and the good news is that scaled advice is working right now.”
“Roboadvice” is not advice. It is online product sales. Just because some regulators and politicians have been caught up in the hype and granted it regulatory carve outs, doesn’t mean it is in the interests of consumers.
The solution to lowering the cost of genuine advice to meet the requirements of more consumers is to fix the regulatory mess that is causing those high costs.
“Digital solutions” are the best thing that has happened for clients in the last 10 years. The solutions are only going to get get better and better. If advisers don’t get on board, accept that “digital solutions” are going to be taken up by more and more clients and integrate them into their business’s value proposition they will not be around in 5 years time. The adviser “pool” is going to look quite different over the next few years. We are going to see more professional, digitally integrated businesses ( possibly less advisers ) with a much better market perception. We’ll see the great advisers providing REAL, VALUABLE, MEASURABLE advice. The smoke and mirror advisers are to be exposed.
Yeah OK Pat, whatever you say
There’s no doubt digital solutions will become more prevalent, especially as the younger generation accumulate wealth, but I would personally be mindful of any under the table deals between the Robo adviser and ETF providers / Fund managers before committing to utilising such a tool. Full, easy to read disclosure should be made of any conflict of interest. There is a large risk of Robo advice being very compromised.
Personally I feel that as ETF’s take a greater footing in Australia, people will also start to bypass Robo advisers. Either invest directly into ETF’s themselves or have an actual adviser explain things to them. Most of the conversations and indeed the tasks my business perform for clients will be very difficult for AI to perform, most of it is actually quite general in nature.
Six Park have a direct conflict of interest in their commentary and have a very close friend within ASIC in
Danielle Press who in 2018 was appointed to the board of Six Park.
Let’s watch as ASIC’s recent commentary and push for scaled and limited advice to become more efficient and cost effective is directed straight to the robo-advice businesses like Six Park.
It will be entirely unsurprising that ASIC will subliminally promote the use of businesses such as Six Park.
The other reason why ASIC will be pushing for scaled and limited advice to be much easier to provide will be to take the current heat off the Intra-Fund advice models within Industry Super funds and allow ” simple ” personal advice to super fund members to be provided by call centre staff without the necessary qualifications,
knowledge or requirement for BID.
Regardless of what ASIC say about their concerns relating to rapidly decreasing adviser numbers and the cost and complexity of advice, be under no illusion this will be a structured and strategic play into the Industry Super funds hands.