The winds of (digital) change stop for no-one

In a special report released on 20^th May, titled The Future of Advice published by the Australian Financial Review, it was very clear that the pace of change within the advice industry is taking place at a very rapid rate.

The Government push for Superfunds to offer financial advice to their members – particularly to those approaching retirement has always been a contentious issue.

Moving from managing members funds to offering compliant financial advice is no easy step. However, many of the larger superfunds and those who have the resources, funds and infrastructure, are now moving ahead to do so.

If we consider the quantum of members that the largest say 6 superfunds engage with on a daily basis it is in excess of 10.0m many millions of people (APRA report: Annual Fund Level Super-Statistics June 2023).

Competition to the tradional financial advice industry is now well and truly here, and the Superfunds are leading the charge.

A Wake-Up Call to the Industry: Embrace Digital Advice or Lose Clients

On the 7^th December 2023, The Financial Services Minister announced that the Government would be accepting the majority of the QBAR Recommendations. He also announced the following:

“Scale will also be met by emerging digital advice technologies. The benefit of digital advice is that it enables the client to receive helpful advice at a time and place that suits the client. 

In the superannuation context, I envisage that funds will look at embedding these digital tools into their advice services. 

This could enable a member to assess where they are and where they want to be.  And then develop a contribution, investment and drawdown strategy that delivers them the income they want in retirement.  

However, many consumers still want human support through this process.  To date, this has limited the potential of digital advice given this would require a professional adviser to provide this support.  

Our approach unlocks the potential of digital advice by allowing qualified advisers to fill this role.”   

If we move past the ‘Qualified Adviser’ comment and focus on the real issue which is: Digital Advice is providing the opportunity for more participants to enter the industry and offer accessible and affordable advice – with scale, to service thousands of clients at the one time.

If advisers do not see this as both; increasing competition but also a great opportunity, then they do so at their own peril.

Competition: Superfunds, accountants, mortgage brokers, associations, employers etc. – can now offer compliant affordable advice to their stakeholders. A number of the people who take up digital advice are in fact, the future comprehensive clients of financial advisers.

Opportunity: Embracing digital advice, offering it to millennial, non-advised and children of HNW, is a sensible step advice firms should consider. In fact, offering it to the firms referral partners such as accountants, mortgage brokers and employers is advisable, as it allows you to scale, reach more people in a very efficient and effective – cost and engagement capability. It will generate new business by stealth, i.e. the tech is doing all the work – not the adviser. It’s what is called now ‘The Other (Digital) Adviser’.

Listen to our latest podcast about this topic with guest speaker  Arthur Kallos, CEO & Founder of Spark Financial Group; one of the industry’s fastest growing AFSLs.