Underinvestment in advice tech a ‘national disgrace’

There needs to be a greater level of investment in advice tech to support both advice businesses and investors, with platform executives arguing there is a severe shortage in funding.

Speaking at the Stockbrokers and Investment Advisers Association conference on Tuesday, AMP group executive for platforms Edwina Maloney explained that the client experience and efficiencies for advice practices are intrinsically linked from a platform perspective.

“If you drive productivity in advice practices, they can drive down the cost of advice that they charge their investors, and that has a direct benefit through to investors. So, I think we do think about the two as linked, and we do also invest quite heavily,” Maloney said.

“It’s really important that as the adviser is sitting there with the client, they are served up information and reporting and insight that really supports that client interaction, so that continues to be a key focus. But I think just because you’re investing in advice efficiency, it does absolutely have an end benefit for the investor.”

Jason Entwistle, director strategic development at HUB24, added the disparity in the amount of advice revenue being invested in advice tech between Australia and a country like the US is having flow-on effects to client outcomes.

According to Entwistle, in Australia, around 8 per cent of advice revenue is invested in technology, while this figure is more like 15 to 20 per cent in the US.

“The underinvestment advice tech in our industry is a national disgrace,” he said.

“[The US] has much more scale and much more integration and efficiency delivered because of that investment, but also their scale.”

The investment “pot” within the tech in the wealth management industry is also “really small”, Entwistle added.

“We don’t have an Airbnb or an Uber kind of experience for wealth investors, because we just haven’t made that investment,” he said.

“The data is a really big part of it. We’re pushing hard into that space, but we’ve got to find better ways to engage our clients, make them safer, make it cooler, and deliver that real efficiency we can with automation.

“That device in my pocket is the best way we’ll automate things between client and whatever’s happening with the advice firm, and we haven’t, as an industry, invested a lot in that.”

Maloney added that retirement solutions can drive benefits and a “real uplift” for clients in terms of retirement income, but advice tech simply can’t model these scenarios and “hasn’t been interested in trying to model them”.

“It’s a bit of a travesty. This is a massive opportunity for investors, real benefit to an investor as they move into retirement, and we can’t get advice tech,” she said.

“Now, that’s not exclusively, we are working with a few groups right now to help them model that out and I think that platforms are helping support some of that advice tech, but that’s not our domain to build that. We have to rely on advice tech to be able to build it.

“There’s some really cool solutions out there. The regulatory environment has changed to enable those solutions, but the tech hasn’t caught up with enabling them to be modelled effectively through the advice tech.”