Tech a key enabler for banks and SF to deliver personal advice

Oksana Patron

4 October 2022

Technology may become a key enabler for banks, superannuation funds and other financial product providers to deliver personal advice service, according to Midwinter’s chief commercial officer, Steve Davidson.

In its submission to the Quality of Advice Review (QAR), the financial advice technology provider said the proposed reforms may encourage banks, superannuation funds and other financial product providers as well as new entrants to enter or re-enter advice, increasing access to the advice.

“We believe a broadened definition of ‘personal advice’ and the removal of regulation around ‘general advice’ is a positive change for the industry but caution this needs to be implemented in a way that it can be adopted without ambiguity or confusion for financial advice providers,” the firm said in a submission.

“Assuming superannuation funds, banks, other financial product providers and new entrants believe they can confidently manage the risks inherent in providing advice, this broadened definition may encourage them to offer financial advice, leading to increase choice and personal advice options for consumers.”

According to the software provider, this would also “increase the willingness for financial institutions” to make investments into the provision of advice.

However, the firm stressed, it was more important to regulate the outcome of advice rather than the process, with a focus on ‘good advice’ as a more effective way to serve consumers.

“We see a focus on consumer outcomes as a positive way forward for the industry, but only if advice providers are confident that they can invest in the innovation to provide ‘good advice’ rather than risk mitigation and compliance. This will reduce the need for RegTech solutions to manage complicated processes and open a path for increased innovation and differentiation around advice provision and the consumer experience.”

At the same time, the company highlighted that technology would be pivotal to enabling this innovation and would likely to lead to improvements in how advisers articulate or demonstrate good advice, while reducing the time and cost required to produce advice.

“The future of the advice profession is a hybrid model, combining digital and adviser-led interactions.

“Digital technology will provide advice for simple consumer needs and support interactions with professional advisers. Advice providers will benefit from a single advice engine that can service all types of advice and channels including general information, self-directed, intra-fund, and comprehensive advice, leveraging efficiency and risk reduction from common components which can be tailored to different audiences or individual situations.”