‘Continuum of advice’ key to expanding accessibility

As demand for financial advice continues to outstrip supply, the founder and chief executive of Otivo, Paul Feeney, told ifa that there needs to be a “continuum of advice” in place to service Australians at a range of price points, spanning from basic digital guidance to professional, comprehensive advice.

“They’ve got their 100 clients. Why can’t they have another 500 who are utilising a digital advice platform whereby the data tells the adviser or the licensee or the advice firm when to proactively approach them?” Feeney said.

“If someone comes through that digital door first, it doesn’t preclude them going and speaking to an adviser and from there the adviser can look at their digital advice platform and see where they’re at and see where they can help them, which will then make giving their advice even more efficient.”

Regardless of the fact that not all Australians need full-service advice, one of the biggest barriers to accessing advice is the high cost. As such, Feeney said that technology is essential in bridging the gap without trying to replace the role of professional advisers.

“If we look at the average cost of advice, it’s anywhere between $3,500 and $5,000. The most significant part of that cost is human time. It’s the time of the advisers and the time of the associates inside their office who helped them put that advice together,” he said.

“That’s where digital technology, because it’s infinitely scalable, can actually provide advice at a cost base that’s available to every single Australian.

“What it does is it improves the financial health of everyone, and eventually they’re going to want to sit down, many of those Australians will eventually want to sit down with a traditional face-to-face adviser. Whether it’s ongoing or one-off, it’s going to be of some value, and this is starting that process.”

Feeney added that digital advice is useful as an offering for super funds to add value and boost retention, but also for advice firms, allowing them to help those who can’t afford their comprehensive offering.

“Now they don’t have to turn away people who are coming for help. They can say, ‘Well, look, start off with my digital advice offering. You can always click a button and ask for help, and there may be some fees for us to help you beyond that’,” he said.

“If you’re an adviser, you fundamentally just want to help people, and the worst thing as an adviser is having to say to someone, ‘Sorry, I can’t help you. I’ve got to let you wander in the wilderness’.”

Furthermore, as young Australians are often left to their own devices because they are considered largely unprofitable clients for traditional advisers, Feeney said that digital offerings are essential in preparing future generations for retirement.

“People always talk about all these people retiring soon. The best way to have a better retirement is the earlier you start, the better off you’ll be. It’s giving people the context and the understanding of how things work. It’s giving that confidence to act, and that comes with advice,” he said.

“Our mantra basically is that every single Australian should be able to have the information they need, when they need it, to make a well-informed financial decision. And our perspective has always been that general advice or information or education falls short of what the everyday Australia needs.

“That’s where it needs to be personal advice. The education and the general calculators, they’ve got [to] have a purpose, and they are useful, but it’s that next step that has the personal context. That’s where you get the most value, and that’s what Australians are really looking for.”