As discussions regarding access to affordable financial advice ramped up in 2024, five superannuation funds – including Hostplus, HESTA, UniSuper, AMP and Colonial First State (CFS) – set about launching digital advice initiatives to address the matter.
Speaking on a webinar last week, Peter Worn, Finura Group joint managing director, commended these funds on paving the way for the future of digital advice, rather than waiting on reforms to change the industry.
“It did feel to me like a sector that no one wanted to be first, but equally, no one wants to be last … the regulatory environment is quite fluid, so people are waiting to see with QAR,” Worn said.
“But what I was really so in admiration of, I guess, are some of these businesses that stuck their neck out to put some money behind this was that they got ahead of the regulatory change, not waiting for it, and they’ve actually found ways to fund digital advice strategies for the future. So, I think this is good for everyone.”
Despite high expectations from the sector, Worn said digital advice “made ripples, not waves” last year, as early engagement with these offers appears to be low.
“Digital advice has been talked about for a long, long time in our sector and yet it is a space that we sort of are struggling still to get some traction on,” he said.
However, Worn explained that getting a clear understanding of client use has made it challenging to gauge if and how members are using digital advice tools while also leaving the sector in the dark about what needs to be done to improve digital advice as a whole.
“We’re still seeing a lack of data on what the take-up has been of those funds, and I think even if the take-up hasn’t been great, we should talk about that as an industry, because that is an industry-wide problem,” he said.
“We are making a very big assumption as a sector, that digital financial advice is going to solve this advice affordability gap that we’ve got. And if there are some reasons why maybe Australians aren’t taking up those digital offers, then let’s get to the bottom of why they are and find a way to solve it.”
Even with these difficulties, Worn still believes that digital advice is the way forward, as other markets have shown that such tools have a role to play in the advice space.
“I still, in my heart, feel that it is the right path. It’s the only logical path, but it’s not just the case of, let’s build it and they’ll come,” he said.
“I think we’ve got to think more broadly about the business model of digital advice, how it’s supported, how it’s promoted, because we have seen in other markets like the US, that providers like Vanguard kill it in digital advice and do this really, really well.
“So, I’m still a big believer in this business model. I still think there’ll be a lot of action in the next 12 months on digital advice, but I would like to see more data sheets across the sector on how it’s going.”
Digital advice isn’t helping anything except occupy budget on product providers like industry funds pushing toilet products and eating their engagement budget instead of helping members lol
Hostplus should be careful, as they justify higher fees by saying “higher fees are required to achieve higher returns”.
Also putting a 59 yr old into a high growth investment just because they wanted it doesn’t meet the ïn the best intrest of the client test.
Robo advice will be the next royal commission.
Please provide details of when and where Digital Advice has been successful & profitable ?
Given the additional complexities of Australia’s terribly complicated Super, Age Pension / Retirement system, if Digital Advice is not successful elsewhere, then even less chance in Australia’s wealth labyrinth.
Given the number of tax file numbers that are being stolen, and the admitted insecure nature of MyGov, no one with serious sums of money would use digital online investing (or do online tax), without a real adviser or accountant to keep an eye on things. It’s like trying to locate lost baggage after a plane trip (without tracking capacity). You take your heart in your hand, every time.