Digital the key to bridge advice gap
Digital technology has been touted as the solution to bridge the gap in the advice industry, as uncertainty grows regarding the inadequate number of financial planners in Australia able to meet consumer needs.
Craig Keary, the CEO of Ignition Advice for the Asia-Pacific region, said there is cause for concern due to the simultaneous decline in Australian financial advisers and rise of older investor segments.
“But at the same time, the industry should also be focused on how digital advice technologies can increase the accessibility and affordability of financial advice,” he said.
“More advisers will not make advice more efficient or cost-effective for the majority of Australians. The answer does not lie in planner numbers alone but rather in how advice is provided and how people wish to access it.”
Keary highlighted the growing gap between the demand from retail investors and super fund members for cost-effective and accessible advice, and the declining supply and rising price of traditional face-to-face advice.
“Whilst many of the recommendations from the Royal Commission have been adopted, accessibility and affordability of advice has not improved,” he said.
“Rather, what has been observed is a reduction in financial adviser numbers and a significant rise in the cost of traditional advice delivery – in part due to complying with much higher costs of industry regulation.
“As well, from the perspective of the consumer, we have seen a fall in the ability of the industry to deliver advice at affordable price points.
“This advice gap can only be solved by digital advice technologies – there is no other realistic route to providing low-cost, consistent, compliant, robust personal advice at the sort of scale required to materially close the advice gap.”
This comes after Ignition submitted its framework for the adoption of digital advice in the industry to Treasury’s Draft Terms of Reference for the upcoming Quality of Advice Review. It highlighted the involvement of digital in areas including financial tools and calculators, robo-advice and advice delivery.
“While each category in the framework has a part to play in assisting and advising retail investors, it will be only via digital advice, which allows advice at scale, that more Australians will have access to the advice and support they need for their financial future,” Keary said.