The emergence of new, technology-powered advice models will drive old-school financial planners out of business, according to an expert panel at the Financial Services Council conference in Brisbane.
The panel, which consisted of Bill Danaher, chief executive Industry Fund Services; Rod Bristow, principal of dealer group, Infocus; and Paul Barrett, ANZ general manager advice and distribution, concluded that technology would play an increasingly important role in the delivery of financial advice.
Danaher said that technology could potentially make it possible for “one adviser to proactively service 2000 clients for $100 each per annum”. He cited research by Rice Warner Actuaries, which found 44 per cent of people preferred to receive, and pay for, advice piece-by-piece rather than receive ongoing holistic advice.
“The internet and social media puts the consumer in the middle of the conversation. It’s a case of them telling you want they want and when they want it, and if you try and tell them, they’ll just tell their friends,” he said.
“Advisers need to be more savvy and adaptable to keep up with new clients or they’ll leave us behind, or someone else will rise up and replace us. Consumers want to do things on their terms.”
Danaher described a future where advice businesses were able to help clients around the clock, seven days a week. He said a “click and call” model would be one of the ways advisers could demonstrate their value in an increasingly competitive marketplace.
He conceded that such models would be expensive to run, and would require new systems, processes, marketing strategies and pricing.
“We have to make the financial planning process more user-friendly and affordable. We have to balance the commercial realities of running an advice business with ensuring that the people who need advice the most get access to it. We need to innovate and find new ways to engage clients and distribute advice,” Danaher said.
Clients will dictate advice process
ANZ’s Paul Barrett said the attention of the financial services industry had recently been monopolized by the Future of Financial Advice and Stronger Super reforms, as well as the continual debate about aligned versus independently-owned advisers, and who owns the clients. However, the real issue was about how best to meet the changing needs of consumers.
“Opt-in will be the least of our worries by the time the first formal opt-in paper has been signed. The industry has been focused on short-term issues but the real battleground is for clients,” he said.
“Most Australians don’t want expensive, holistic, one-size-fits-all advice. We must allow the client to dictate and construct their own bespoke advice process.”
Barrett said the solution to making advice more relevant and affordable lay in technology, citing examples of websites which had managed to build trust and intimacy with users over the internet.
“Consumers want to take control of their financial situation and the cloud is as good a place to start as any. It’s cheap, it’s quick and it’s available at any time of the day.
“No one owns this and no one owns the client. The client will determine where they go not an industrial award or their banking institution.”
Barrett concluded that the stakes in financial planning were higher than ever with an increasing number of clients disengaging.
“Imagine where we’d be if the $700 million or so spent on implementing FoFA was spent on building an advice drone,” he said.
