Digital advice a critical affordability component
Digital advice specialist Ignition Advice has sought to make the distinction between digital and robo advice, arguing that its digital offering is already fully compliant and should benefit from the Government’s quality of advice review.
Outlining its submission to the current Treasury review, Ignition claimed that digital advice was key to achieving the review’s goal of “high quality, accessible and affordable financial advice for retail investors”.
“There is no other realistic route to providing low-cost, consistent, compliant, robust personal advice at the sort of scale contemplated,” the company said.
“This conclusion has been obvious to many in Australia’s financial services industry for some years: the past problem has been a lack of sufficiently sophisticated digital advice solutions for institutions to consider,” it said. “However what seemed blue sky even five years ago, is now in production. Ignition Advice, for example, is live with multiple clients in Europe, providing adviser-supported, direct-to-customer, and hybrid advice models across the key topics of retirement, investment and insurance.”
It said that the UK and Irish wealth industry in particular was rapidly embracing hybrid digital advice as a means of addressing the advice gap, finding new sources of growth, and responding to regulatory requirements such as pathways at retirement.
“By comparison, the Australian industry has been slower to move. Many institutions have had other priorities in recent years, or have not seen themselves as being in the business of advice provision. Some have been scarred by the Royal Commission experience, or remain wary of the subsequent regulatory uncertainty such as the Westpac general advice case.”
“While Ignition’s view is that digital advice can already be embraced in a fully compliant manner, it’s likely that the QoA Review will further ease concerns about risk and compliance in relation to digital advice,” the company said.
It said there was an obvious intersection between the Quality of Advice Review and the Retirement Income Covenant and urged that the policies be pursued in tandem.