Digital advice shining light in QAR final report

Yasmine Raso

Senior Journalist, Financial Newswire

10 February 2023

The recommendations from the Quality of Advice Review’s (QAR’s) final report handed down earlier this week have made clear the crucial role digital tools can play in improving the affordability, accessibility and quality of advice.

In the report, reviewer Michelle Levy said the slow adoption of digital advice tools in Australia can be attributed to the hesitation to invest the time, resources and capital needed to develop such tools amid a time of rapid regulatory change and ongoing complexity.

Craig Keary, CEO Asia Pacific at Ignition Advice, said Levy’s recommendations signal the potential for digital advice capabilities to allow all advice providers the opportunity to offer more personal and cost-effective advice.

“The high price of advice indicates that demand is already soaking up Australia’s 16,000 financial advisers, even before an extension of what is considered as personal advice,” he said.

“Digital advice tools will allow many more consumers who would benefit from advice to be served. Moreover, Ms Levy sees the use of digital advice tools as improving the quality of advice delivered to consumers.

“In her report, Ms Levy points to technology as having a crucial role to play in helping more Australians access financial advice, in particular by allowing institutions to offer advice at the simpler end of the advice spectrum to its customers.

“Indeed, the only realistic way in which the advice gap can be solved by making low-cost advice available to large numbers of consumers.”

Keary also said the final report could be Australia’s first steps towards following the UK’s example, as financial institutions use digital advice technology to enhance the efficiency of their financial advisers.

“Indeed, Ms Levy concludes that the provision of digital advice does not require specific regulation or specific regulatory changes but is inherent in the drive towards “good advice”,” he said.

“Rather, the ability to provide widespread digital advice is an outcome of the recommendation that a “good advice” duty applies to any person or institution providing advice, including digital advice tools, rather than being an individual financial advice construct.

“By implication it is clear that financial institutions – banks, super funds, insurers etc – can use digital hybrid models today, rather than wait for any changes to the regulatory framework. By allowing financial advisers to use digital advice tools, they will be able to serve many more customers, at much lower cost, than has been possible in the past.

“The Final Report is the culmination of what has been the most productive government review of the financial services industry in many years and we look forward to its implementation.”