Digital advice ‘key enabler’ for affordable advice

Midwinter has joined the ranks of organisations backing Michelle Levy’s QAR final report, particularly noting her emphasis on the role of digital advice.

Midwinter chief commercial officer Steve Davison said: “A whole segment of the market is locked out of advice due to prohibitive costs today, a problem which is exacerbated by the fact that most personal advice services are too sophisticated for the simple advice needs of the average consumer.

“The role of digital advice has been called out in the report as a key enabler for providing affordable advice offerings and reducing complexity for professional advisers. Midwinter digital advice technology already underpins member and adviser-led advice services — predominately intra-fund advice — for 12 superannuation funds.”

While the final report did not make any specific recommendations for digital advice, Ms Levy was confident that the report as a whole could improve the conditions for the provision of digital advice.

“I am satisfied that the recommendations in this report will assist existing providers — financial institutions and financial advisers — to provide more digital advice tools to their customers and clients,” Ms Levy said in the report.

“In many cases they will do so at no additional cost. I am also satisfied that they will help existing and new providers of digital advice tools to offer new digital advice services to consumers. To quote the terms of reference, they promise to ‘enable mass market adoption of low-cost advice’.”

She added: “I am convinced that digital advice tools can make good quality financial advice widely available.”

Mr Davison agreed with the sentiment, noting that: “Broadening the scope of organisations that can provide advice is an opportunity to fill the consumer advice gap by allowing financial product providers to serve consumers with simple or limited needs, while professional advisers serve the portion of the market that wants scaled through comprehensive advice or an ongoing adviser relationship.

“We believe technology will play a pivotal role for both relevant and non-relevant providers by increasing the reach and relevance of financial advice.

“It will by no means completely replace the role of a professional financial adviser; the role of digital advice is to facilitate advice for consumers with simple needs and offer a path to comprehensive advice through client engagement tools and advice journeys delivered by professional advisers.”