Advice fees have risen 16%
Automating key process with the use of technology will continue to improve the accessibility to financial advice and help reduce the cost of providing the advice to the end customers and those who need it the most, according to Padua Solutions.
With the rise of advice fees, given that initial advice fees charged by advisers on a per advice document basis having increased from $2,859 in FY21 to $3,315 in FY22 (16%), the regulatory burden on financial advisers has also increased, requiring them to devote more time to ensuring advice documentation adheres to compliance requirements.
Meanwhile, ongoing advice fees charged by advisers on a per advice document basis rose from $3,656 in FY21 to $4,865 in FY22, representing a significant increase of 33%.
In addition, the mass exodus of advisers from the financial advice industry further exacerbated existing concerns around the cost and accessibility of advice forcing advice businesses to look for the technology partners to reduce the rapidly growing costs.
According to Padua Solutions co-chief executive and co-founder, Matthew Esler, the technology could help the financial advice practices with simple things like client’s fact finding or using algorithms to determine the right advice strategy.
“As an example, advisers who use our software can generate Records of Advice (RoA) in 15 minutes for a cost of $125, and simple Statements of Advice (SoA) in 30 minutes for a cost of $250 through our DIY capability. Complex SOAs average $575 through our services,” he said.
“These are important proposals, but we also believe the cost of running an advice business – and therefore the cost of financial advice to the end user – can already be reduced today by finding the right technology partner. Automating as much of the technical components of providing financial advice should be viewed as a priority in the future viability of the advice industry.”
Esler also stressed that the recently released Quality of Advice Review Consultation Paper prioritised accessibility of advice by putting forward several proposals that simplified reporting requirements on advisers and the cost of running an advice business.
Just stop it. Technology isn’t going to fix extremely poor regulation/legislation and a worse regulator. Michelle Levy needs to stop listening to conflicted technology providers who care very little about the advice profession and the outcomes for clients. It’s clear the rise in advice fees is a direct result of excessive regulation, which is over policed by a regulator hell bent on running all advisers out of business and directing clients into the hands of product providers, mainly their union fund buddies. If the response from Ms Levy is to use technology as the cornerstone to fix the cost and access issue for clients then the whole process is a waste of time.
Totally agree, Robo Advice has been a massive global failure. And with Australia’s world record winning pile of stinking Red Tape BS costly useless Regulation & Regulators it has even less chance here.
But hey IT, Technology gurus & useless politicians like Ms Hume love to talk up their chances :-/
What are all these software providers going to do when advisers don’t need to produce a SOA or ROA? They aren’t very good as a CRM and most of the product research they provide is poor.