Regulators don’t discriminate, says global robo-adviser

ASIC recently made a determination that Sydney-based licensee Lime Financial Services shut down its robo-advice tools – Plenty Wealth and Lime Wealth – over concerns that the level of enquiries made by the online tools about client objectives, financial situation and needs were inadequate.

It found that, in some instances, the recommendations generated by the tools were in conflict with client goals or with other recommendations also generated by the tools.

But speaking exclusively to ifa, Quantifeed senior executive of strategic partnerships Graeme Brant said ASIC has made it very clear that there isn’t a different set of rules for robo-advice compared with human advice.

“It's one playing field and everyone has to meet the same requirements,” said Mr Brant. “If a robo platform is providing personal advice, but it's not meeting the requirements, then there's a shortcoming.

“It's very clear if you're providing personal advice, then there's certain requirements placed upon you, just as there are when you're a human adviser. During the banking royal commission, we saw plenty of instances where those requirements weren't being fully met.

“There's two ways of looking at it. One is you build your robo platform to make sure that all of the requirements are being met. Or, you have a look at the opportunities, and where you see that there's some significant opportunities to have a robot platform, but stay out of personal advice and just stick to general advice.”

Clients are looking to shift advice provider

EY’s 2019 Global Wealth Management Report revealed that a third of wealth management clients planned on moving their advice provider within the next three years.

This shift is particularly pronounced in Australia, where 40 per cent of clients are thinking of shifting their advice provider over the next three years, compared with just 13 per cent of clients who changed provider over the preceding three years.

Based on those statistics, Mr Brant notes that while that doesn’t mean that the adviser is out of the picture, it does mean that it’s worthwhile for an advice firm to consider providing a digital means to interact with clients, otherwise they are most likely going to look elsewhere.

“It's becoming a must-have as part of the toolkit, as part of the customer proposition. If they're not providing that, then there's probably someone down the road who is. Clients are also showing that they're quite happy to be mobile as well,” explained Mr Brant.

“The intensified competition among incumbents and new entrants presents clients with a multitude of options for wealth management providers, heightening the pressure on firms to continuously raise the bar for satisfying client demands.

“Unless you have got your value proposition pretty well narrowed down as a wealth organisation, you perhaps are at risk of losing customers.”

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].