Digital advice should be viewed as an ‘adviser’s best friend’

Fund manager abrdn and three fintech firms, Ignition Advice, moneyGPS, and Advice Intelligence are in the final stages of formalising the launch of their digital advice association, which aims to advocate for change in financial advice regulation.

While the Quality of Advice Review (QAR) did not probe digital advice, in detail, it did suggest that digital advice providers be exempt from the duty to act in the best interest of customers, and instead be subjected to a new duty to provide “good advice”.

Since the release of the final QAR report, digital providers have rallied in a bid to yield an influence on related policy, with the Minister of Financial Services, Stephen Jones, himself said to have encouraged abrdn and its fintech partners to establish an association.

Speaking on an upcoming episode of the ifa podcast, the founder of moneyGPS, George Haramis, revealed that the group already has a direct channel to the minister’s office.

“He has invited us to present our respective digital platforms so he has a better understanding of what’s out there,” Mr Haramis said ahead of his appearance at this year’s Adviser Innovation Summit.

“All of us do something quite different. The aim is the same, but the delivery of the service is different in various respects.”

The association currently has a number of key aims, one of them being “to replicate the interaction between an adviser and an individual in a digital world”.

“Most people can’t afford to meet an adviser face to face because of the cost and so on,” Mr Haramis said.

But while bridging the gap between access to advice and Australians via digital solutions is a major goal for the association, Mr Haramis assured that advisers have nothing to worry about.

“Digital advice should be viewed as an adviser’s best friend,” he said, adding that digital advice platforms can engage clients en masse without a need for “human interaction”.

“A lot of advisers are being slammed at the moment, because of the demand for advice. They’re either having to turn clients away, or put them on hold in terms of delivering services and not charging of course, so digital provides them with a chance to engage a greater number of people who may be in the accumulation phase of their lives, can’t afford the 4 or 5 or 6 thousand dollars an adviser is charging for a financial plan … and digital advice provides that platform that allows people to engage with advice that is best suited to their needs at the time when they need it,” Mr Haramis explained.

He likened platforms to a funnel that pinpoints clients needing further assistance and refers them to professional advisers.

“Digital advice can only do so much. It doesn’t provide fully comprehensive analysis … So, if I was an adviser, I’d be thinking this is great because I can focus on my clients that need my comprehensive, traditional advice expertise, I can develop a new market or a new client group that is in that wealth creation stage, accumulation stage that may not be able to afford my services right now, but I can still look after them,” Mr Haramis said.

The association’s founders — fund manager abrdn and firms Ignition Advice, moneyGPS, and Advice Intelligence — will join Adviser Innovation’s editor, Maja Garaca Djurdjevic, on a panel at this year’s Adviser Innovation Summit to discuss their goals, and how a unified and coordinated voice for digital providers can revolutionise the industry.

Speaking on the occasion, Jacqui Henderson, founder and chief executive officer of Advice Intelligence, said: “We are on the precipice of a new era for financial services, and I am excited to welcome this next evolution of financial advice”.

“The digital advice landscape enhances the adviser and client relationship in significant ways that will benefit both consumers and the wider industry — improving the advice journey, building efficiencies, and bolstering business success.”

To secure your ticket to the Adviser Innovation Summit 2023, click here.