Digital firm’s voluntary administration exposes industry’s lack of digital advice awareness, says moneyGPS CEO

The culprit is the lack of progress that a “number of segments” in the industry have made towards engaging with digital advice providers, George Haramis told ifa.

Engagement, he said, is key to “clearing the fog” surrounding digital advice.

“It’s the lack of understanding of what digital advice is. People need to get under the bonnet and we’re, from a moneyGPS perspective, we’re happy to lift the bonnet for people who are genuinely looking to engage and to deliver digital advice to their members or their clients,” Mr Haramis said.

“I think if people get an understanding of how it’s all put together, rather than just a demo, they’ll feel more comfortable delivering digital advice to their clients or members.”

Without progress in the digital advice space, Mr Haramis cautioned “lots of Australians will go without advice”.

“I would encourage everybody to do that, but by the same token as a provider of digital advice, we don’t want to see anybody stop or close their doors. So, my heart goes out to Jacqui and the staff.”

Mr Haramis believes the Financial Services Minister’s impending announcement regarding the Quality of Advice Review (QAR) will serve as an enabler for digital advice providers.

“We hope that progresses quickly,” he said.

He explained that the QAR will help bridge that gap between digital providers and advisers because it recognises digital advice as a vehicle that can make good quality financial advice widely available.

“One of the outcomes that Michelle Levy is hoping to see is that the positioning of digital advice will be viewed as mainstream offering as it is slowly being viewed by a number of participants in the industry,” he said.

“It’s the only way that 90 per cent of the population can access advice,” Mr Haramis added.

moneyGPS and Advice Intelligence were among the firms that recently teamed up to establish the Australian Digital Advice Association (ADAA), aimed at advocating for change in financial advice regulation and improving the delivery of digital advice solutions.

On Thursday last week, Advice Intelligence announced its sudden demise, with CEO Jacqui Henderson confirming to ifa that the firm had entered voluntary administration following a decision from its investor Regal Funds Management to withdraw future funding.

This decision, Ms Henderson confirmed, was founded upon a landscape of high-interest rates, economic uncertainty, and the overall tightness of capital markets.

She further explained that while the firm “continues to seek financial assistance from a number of parties”, it has “not yet secured the support required”.

The idea to form ADAA was first floated at a Quality of Advice Review (QAR) roundtable several months ago in response to encouragement from both Michelle Levy, the QAR review’s lead, and Financial Services Minister Stephen Jones.

ifa also learnt Minister Jones’ office was specifically interested in establishing a visible industry touchpoint with expertise in digital advice, with which it could interact as it tackled related policy.

Also last week, AMP’s new Digital Financial Advice Market Scan found that, in recent times, there has been a surge of interest in financial advice solutions, with a wide range of entities, including superannuation funds, insurers, banks, asset managers, platform providers, and financial planning firms, exploring opportunities in this space.

The report, commissioned in partnership with KPMG and based on a survey of 16 digital providers, found that the recent “flurry of activity” had been driven by several factors including QAR and declining adviser numbers.

According to the report, which, among others, surveyed abrd, Ignition, Iress, Mercer, Midwinter, and moneyGPS, the industry is now eager to determine whether this increase in interest could actually translate into the successful adoption of digital solutions by enterprises and customers alike.

The report underlined that while providers are fairly confident that customers would embrace digital financial advice in the same way that they have embraced online shopping and banking, they need greater assurances regarding regulatory parameters.

Moreover, AMP found that, regardless of whether the QAR recommendations are accepted or not, providers would still need to carefully design advice offerings and pricing arrangements to operate within the proposed good advice regime — including acting in members’ best interests, delivering member outcomes, treating members fairly and reasonably and supported by good decision-making frameworks, good governance, and monitoring and oversight programs.