Filling advice gap needs an ‘industry-wide response’

DASH Technology Group chief executive Andrew Whelan said that while digital advice has an important role to play in expanding access to advice, human advisers will remain a central aspect of the ecosystem.

“I don’t believe that it should be the generator of the advice itself. So, creating the recommendations, the product recommendations or the strategy. Like, contributing more, change your risk profile, take an allocated pension, retire at this date,” Whelan said on Ausbiz.

“That would be really hard to regulate because in many cases, the AI is quite a black box. If the client came with, or the member came with a complaint, it’s going to be very hard to regulate and try to figure out whether the AI generator came up with the right thing at the right time.

“So, it’s going to be very hard to regulate. But that doesn’t mean that we should just throw the baby out with the bathwater in that respect.”

Where digital advice and AI can be of use, according to Whelan, is in helping people with basic financial tasks and in building their understanding about their current financial situation.

“One of the things that we’re looking at at the moment is can I help people fill out budgets seamlessly, understand where they sit, and understand what sort of products they’re in by just uploading documents and letting AI read from the statement and then fill in fields automatically,” he said.

In addition to assisting with advisers’ lack of capacity to take on new clients, he said that digital advice will help reduce the cost of advice due to it being “wildly scalable”, meaning those with less complex needs will be able to access advice at a lower price point.

“Human advisers are critical to the entire ecosystem of advice, and in fact, something like 90 per cent of every digital advice that ever goes through the system to implementation touches a human adviser. So, there’s a human adviser just validating the concerns via phone,” Whelan said.

“But clearly, that sort of scalable journey, particularly for people like [Super Consumers Australia] are talking about, with lower level and mid-level balances, they don’t necessarily have complex needs, but they do need advice and they are confused and they are concerned.”

Given the high demand for affordable, digital advice solutions, some firms have started to deliver.

Announced just last month, Iress launched its digital advice and education solution to help the superannuation industry service the 11.8 million Australians with unmet advice needs.

Last week, Colonial First State (CFS) also announced the release of its digital advice tool, designed by Otivo, providing CFS FirstChoice members unlimited advice on their investment options, contribution strategy, and insurance arrangements for just $88 per annum.

Both firms claimed these were created in response to the rising demand for advice, with CFS superannuation CEO Kelly Power stating they were seeing a “clear demand for more guidance and advice and for interactive tools to allow members to better understand their circumstances and take action as they seek to remain on track with their goals”.

With so many Australians calling for more accessible advice options, Whelan said there needs to be a collective effort to satisfy these unmet needs.

“Underpinning all of this, is that MLC have recently done a survey and they’ve said that 24 per cent of Australians feel like they would benefit from receiving advice,” he said.

“So, there is latent demand out there. It’s about an industry-wide response that, to be able to help them, and that 24 per cent is actually up 4 per cent from last year.”

Whelan added: “There’s a clear gap, we’ve just got to find a way to serve them.”