Major banks’ exit from advice spurred innovation

Ahead of the ifa Future Forum 2022 next week, event partner and software solutions provider Halo Technologies’ head of business development Greg Schapkaitz said that when banks and other financial institutions owned distribution channels, it stifled innovation because there was no incentive to innovate.

“They really had no need to spend money,” Mr Schapkaitz told ifa.

“Banks and other financial institutions captured distribution channels or the population, so why innovate? But now that they are out of advice, advisers are looking for new solutions because they are no longer aligned to a distribution model. There’s much more space for innovation and growth.

“There are lots of new ideas and systems out there that I think can enhance advisers and their practices, and create better outcomes for their clients.”

Advisers have been more innovative when gathering information from and investing for their clients (including using managed funds and managed accounts, and investor-directed portfolio service platforms), Mr Schapkaitz said.

Alongside this, advisers are increasingly tackling conversations around environmental, social, and governance (ESG) issues with their clients, he observed, while new companies that offer upgraded CRM systems and advice modelling solutions have emerged.

However, for those advisers who have not digitised and automated their advice practice, it is still a long journey, Mr Schapkaitz cautioned, while acknowledging that change is difficult.

“But I think they have to face that pain and explore the market because there are better solutions out there than what they have traditionally used,” he said.

“I think they need to look at that initial engagement with clients. How could they do that? How do they make it better? And how do they make them more efficient from that initial engagement through to the actual SOA construction? They then need to look at how they're actually investing and what tools they are using to meet their best interest duty.”

Advisers should use technology to conduct thorough research about the underlying investments in the funds they recommend to ensure it aligns with the client’s profile and goals, even if the fund has received a high rating from a research house, Mr Schapkaitz said.

“Just because someone's given it a rating, doesn't mean that they know the product, which is a bit of a worry,” he warned.

“If advisers are ever called up in front of a Royal Commission, they should be able to demonstrate that when they gave advice, it was in the best interest of the client.”

Mr Schapkaitz’s comments preceded the ifa Future Forum, for which Halo Technologies — an online global equities research and trade execution software solution that brings sophisticated institutional-grade analytical frameworks and market insights to advisers — has signed on as an event partner.

Speaking about the partnership, Mr Schapkaitz said events such as the ifa Future Forum provide a space for sharing new ideas and supporting advisers in a turbulent economic environment.

“One of the things that I've always loved about financial services is that we support each other,” he said.

“It's a very small community and we’re always there to prop each other up when we need it. So, we all have a duty to participate in these sorts of events, share ideas and thoughts, network, learn, and recognise people that are excelling.

“I think we have a duty to leave things better than when we started in financial services. If you participate in these events and you get one thing out of it, then it's worthwhile. One new idea can change the whole way you run your business.”

The ifa Future Forum 2022 is a chance for you to learn how to reset your practice in time for the new year, crush your capacity constraints, win the war on talent, use data to boost efficiency, and leverage your great advice reset to boost revenue.

It will be held on 16 November at Montage in Sydney.

Click here to register for free and make sure you don’t miss out!

For more information, including agenda and speakers, click here.