Technology is poised to play a crucial role in helping more Australians access effective, safe and affordable financial advice, at a time when the number of advisers is declining, says Mike Giles, co-founder and CEO of Ignition Advice.
“There is increasing appreciation that technology can be an extremely valuable tool in the financial advice industry. Important lessons have been learnt from the mistakes made in the past, including the limitations of roboadvice and the need for human interaction,” Mr Giles says.
“On top of this, we’ve seen the take-up and penetration of technology grow exponentially, by people who would never have considered using virtual or online services before, due to the lockdowns and ‘working from home’ requirements over the past 12 months.
“As a result of these developments, we believe the opportunity for technology to change the way that advisers deliver advice, and the way that Australians access it, has never been greater, and at a time when the need for Australians to get advice has never been more important.”
Mr Giles points out that the growing role of technology does not eliminate or even reduce the need for financial advisers.
“Digital advice has evolved from the days when it was envisaged that roboadvice could be a standalone online offering. Now there is recognition that human interaction and intelligence needs to be a vital component of the advice offering.”
And overwhelmingly, he says, advice also needs to be easy to access and affordable.
“Properly developed and implemented, technology can help advisers deliver compliant, scalable and cost-effective advice to more clients, enabling them make the best financial decisions for their future.
“We’ve already experienced this in Europe amongst our enterprise clients, where there is strong evidence of increased engagement with their own customers who are adopting digital advice solutions,” Mr Giles said.
Mark Fordree, co-founder and director at Ignition Advice, says technology will also play an important part in allowing other institutions, such as insurance companies and superannuation funds, to provide simple or single-issue advice to customers.
“Regulatory changes have resulted in major players walking away from vertically integrated models, ultimately leaving millions of customers without easy access to advice. At the same time, government and regulators are talking about the need to lower the cost of advice and to make it easier, and safer, for people to access.”
He says there is scope for other institutions to fill this gap, and to deliver appropriate simple advice in a safe and flexible manner.
“But this evolution in the advice offering will not be at the expense of existing financial advisers. Rather, the future is one where digital technology will be a complementary offering to a market that still sees advice as something that is too expensive or only for the very wealthy.
“Indeed regulators such as ASIC have indicated that they believe single-issue advice can help close the advice gap, and in this environment, it is inevitable that technology will provide the missing piece of the advice puzzle,” Mr Fordree says.