Speaking at the FPA Professionals Congress last month, the head of the Quality of Advice Review (QAR) said she had changed her mind on a few things, including her earlier recommendation for the complete removal of general advice.
Back in August, Ms Levy recommended that “the regime should no longer regulate ‘general advice’ as a financial service, and the definition should be removed together with the obligation to give a general advice warning”.
But, only a few months later, she said it would likely remain.
This apparent rethink, according to Midwinter’s chief commercial officer Steve Davison, makes it very tough for advisers to make business decisions between now and the government’s assessment of Ms Levy’s final report.
Ms Levy confirmed at Congress that she intended to keep the proposal that allows superannuation funds and banks to provide advice.
This one, however, has been very unpopular with advisers, but Midwinter’s Mr Davison believes that technology be used by advisers to retain a competitive advantage.
“Michelle Levy has said that she intends to keep the proposal to allow banks and super funds to provide advice in the report. Professional advisers have an advantage over these organisations through the depth of their client relationships built through human interaction,” Mr Davison said.
Referring to her inference — that robo-advice should benefit advisers in the future — at her last public appearance of the year, Mr Davison said “there is an immediate opportunity for advisers to take the engaging and efficiency-creating digital advice capabilities built and already in use by leading organisations and apply them to their business”.
“Automating repetitive background tasks and augmenting the adviser’s professional skills with compelling digital engagement helps advisers further differentiate whilst extending their reach and relevance to more Australians.”
Ultimately, however, Mr Davison believes that regardless of the final recommendations from the QAR, “the steps to provide advice will remain relatively unchanged”.
“The three key areas an adviser wants to solve with technology — client engagement, efficiency, and compliance — will remain.
“Rather than holding off on making important business decisions indefinitely, advisers should move forward and consider efficiency-creating digital advice tools as a potential advantage for their business rather than a threat.”
To all those saying it is doom and gloom, surely you realise that ASIC regulates the banks, etc very well. They are across it. They have them provide all their customers with 100’s of pages of documentation that clearly explains the pitfalls of all of their products. The consumer doesn’t need protecting any more, as they will understand everything…
Well, until 2032 when A Current Affair expose the banks and Industry Super funds have been using robo advice as a way of funnelling clients into products that had the sole function of making more money for the insitution, not the customer.
APRA regulates the banks not ASIC
Not sure it is wise for people who have not been at the coalface dictating how our industry should be run.
bit like an inner city type telling the military how they should behave.
Sounds like we the advisers get shafted again
What a circus.
Where the advisers have been played for clowns for the last 10 years & fed to the lions.
Absolute botch job.
I just can’t understand how anyone thinks letting product providers (banks/super funds) back into the mix is a good idea. If there is enough capacity in the economy to provide the necessary qualified staff/personnel to fill out an advice arm of a bank/super fund – those people could just as easily be deployed to the private/independence advice space.
Other than making it slightly easier for the consumer to go from one division to another – all I see are negatives with the big boys being back in the game. We’ll be back to an “industry” flogging products instead of strategies all over again.
My view is that Robo-advice will simply shoehorn gullible and naive people into bank and other manufacturers’ product through sophisticated algorithms designed to facilitate product sales. It will all end in tears and AFCA will have a flood of complaints about product failure. How can robo-advice comply with FASEA Standard 6 about the obligation to consider the likely broader long-term interests and circumstances of a client? Oh, I know its that crystal ball algorithm. Quality advice does come at a price and its only skilled financial advice professionals who can educate and navigate solutions for clients, that no amount of algorithms can possible deliver. We listen to our clients needs and objectives by drilling down to a granularity level interactively, that only a human can analyse and advise. I have yet to read an article about how robo-advice is currently working in this space. Anyone agree?
I agree wholeheartedly with your comments regarding provision of advice and the benefits of dealing with a human and their ability to pick up on nuances and subtleties that tech would miss.
However for clients who can’t afford comprehensive advice and require simple advice surely digital advice is a suitable solution provided it offers a broad suite of investment solutions