Banks the key to closing advice gap, Tria says

In its latest Trialogue blog post, the superannuation industry consultant said the key to engaging the majority of Australians who do not seek financial advice is through a digital offer where a meaningful proportion of advice issues (relevant for Australians who can’t afford to see a financial adviser) can be solved in a self-guided manner.

Tria said that while financial software providers (such as XPlan and Midwinter) have been focusing on providing innovative solutions that aim to reduce adviser cost-to-serve with the goals of reducing the price of personal holistic advice for consumers, these fintech providers rely solely on advisers’ abilities to adopt the technology into their businesses.

“As the chart from our Tria Australian Adviser Insights Program (2016) shows, only 30 per cent of non-salaried advisers would consider using digital advice as part of their business, and of that only a third would use it to service clients with lower balances or less complex needs,” Tria said.

“There doesn’t appear nearly enough interest at present to materially diminish Australia’s advice gap.”

“If working through advisers to solve Australia’s advice gap is not the answer – at least until early adopters commit to technology-enabled business models that focus on this segment – who can stand in while we wait?” Tria said.

Major banks have both the scale and relationships to tap into innovative financial planning software development, and the distribution network to reach a substantial proportion of Australians in the advice gap, the firm argued.

However intense regulatory scrutiny and poor public image “may well continue to distract from efforts to crack this space,” Tria said.

“But given enough time, for those that partner well with the technological forefront in algorithmic advice, it could well be them.”