National Australia Bank Wealth’s new free, virtually instant advice tool has flamed fears in financial planning circles that rigid traditional advice models will rapidly become obsolete.
The threat and opportunities presented by emerging scalable advice models was hotly debated at the Financial Services Council conference last week, following the launch of NAB Wealth’s bespoke, online advice tool, which has churned out over 2400 free self-service statements of advice for members since its soft launch in May.
The service is offered by NAB corporate superannuation business, Plum, with an insurance version of the tool set for release later in the year.
The online tool helps members tailor a financial plan according to their life stage and is currently only available to Plum’s 220,000 members. It is understood that NAB Wealth has plans to roll the service out across the group’s broader customer network.
Plum managing director, Lara Bourguignon, said technology enabled members to model different strategies via the online advice engines and then implement the recommendations through online tools, forms or free phone-based advice.
“We developed the service in response to member feedback and have delivered a unique experience with personalised retirement-adequacy projections,” she said.
Bourguignon said the tool demonstrated Plum’s commitment to educating members and providing value. It was also boosting engagement with customers, many of whom were previously unengaged.
“The feedback has been overwhelmingly positive. It shows all the performance levers available to maximise their retirement position, including how investment returns impact their position at an individual level,” she said.
Clients before product
At the FSC conference, John de Zwart, managing director at Centrepoint Alliance, said the number of consumers who wanted full-scale advice was shrinking.
“We’re seeing advisers give up clients at a rapid rate, in part because they’re finding it hard to service 120 clients,” he said.
Perpetual chief executive Geoff Lloyd said current advice models were not sustainable, evidenced by the fact that advisers were losing “thousands of clients”.
“Not all advice is the same and in the past we focused on getting clients to take up full-service advice but that has to change. I feel very deeply for many advisers because they were just doing what we told them to do but now the clients’ needs have changed,” Lloyd said.
Bill Danaher, chief executive of Industry Fund Services, said the evolution of advice models would ultimately lead to the end of outdated models that focus on product placement.
“The advice process should start with the client in mind, not the product,” he said. “We should not be surprised when clients disengage because we’ve been getting them to fit into our business models, when it should be the other way around. Financial planners need to earn a place in their clients’ lives by giving them what they want and meeting their needs.”
Paul Barrett, managing director of global advice and distribution at ANZ Wealth, urged the financial planning industry to learn from the higher education sector, which has faced enormous change due to the rise of massive open online courses, or MOOCs.
An increasing number of students are choosing the convenience of learning online and via correspondence, at a much lower cost than enrolling at a physical university. They attend virtual tutorials and can submit assignments while on holidays. The sale of expensive textbooks has also been falling as students opt to download online material.
“Many clients are not prepared to pay for the full cost of upfront advice, which costs around $3500, but they will pay between $300 and $400,” he said.
“There’s no substitute for face to face advice by most Australians don’t want expensive, holistic, one-size fits all advice.”
