Financial Index Wealth Accountants’ development of an online advice service has clearly struck a nerve among Professional Planner readers.
In a poll launched on the day Findex formally launched its Movo financial planning website, a clear majority of respondents say they perceive online advice as a threat to the quality of advice provided.
At the time of writing – and with a few days before the poll closes – approximately 65 per cent of respondents have labelled online advice as a threat, while about 35 per cent believe that online is a valid way to grow the advice market.
Whether you support online advice or not, one thing is certain: financial planning as a profession has to build a better mouse trap. It has to develop innovative and better ways to attract new clients. It cannot rely in the short term on regulatory reform and steps towards professionalism to raise its standing – anyone following how the debate about amendments to the Future of Financial Advice (FoFA) reforms is playing out in public will realise that particular battle is currently being lost.
One key disengaged group is younger Australians – the so-called Gen Y. Recent research suggests that this cohort perceives the benefit of obtaining professional advice, but also thinks it’s too expensive.
A survey of Gen Y investors, undertaken by RaboDirect, found that 60 per cent of respondents thought “using a planner would be too expensive”.
Perhaps as a result of this, 36 per cent of Gen Y respondents said they turned first to family and friends for advice. “Financial advisers” were used in just 13 per cent of cases.
We routinely hear figures that suggest as few as one on five people who could benefit from using a financial planner’s services actually do so. The RaboDirect figure is slightly less than that, which is disturbing. On the face of this survey, at least, it does not look like there’s swelling demand among younger people for what financial planners do.
A landmark report by Telstra, The Digital Investor, sets out plainly what the wealth management industry, and financial planning in particular, must do to engage with new consumers and new markets. It paints a very clear picture of the role that technology will play in doing just that – and in setting out the challenges and the opportunities ahead, it leaves a very clear message: financial planning has to change the way it pitches itself and its services, particularly to younger consumers.
The author of this report, Rocky Scopelitti, will detail the findings of this report at Professional Planner’s Dealer Group Summit this year, on June 2-3.
Findex’s offering is pitched at tech-familiar, younger consumers, who do not currently use a financial planner. The basic service costs $199, and the deluxe service costs $349. That addresses the perception of cost at least; whether or not consumers perceive value in the service will depend entirely on the output of the system and – critically – whether the advice it produces is actually followed.
RaboDirect concluded that its research had uncovered “a clear opportunity for planners to engage with younger generations to teach them about the value of financial planning and show them the benefits that come from investing in their financial wellbeing”.
RaboDirect’s national manager key account services, Bede Cronin, said that “Gen Y needs to understand that financial advice doesn’t have to be complex and costly”.
“It can be simple, affordable and deliver better financial outcomes than would be achieved in the absence of professional advice,” Cronin said.
“And with more than a quarter of Gen Y saying they think they will run out of money during their retirement, it is never too early to enlist the help of a professional who can design an appropriate financial plan to set you up for the future.”
It’s important to remember that Findex’s online service, called Movo, isn’t totally automated. It’s not some dumb system that attempts to foist a one-size-fits-all financial planning service on every consumer. Behind the scenes, a Findex planner is involved in every online interaction. Findex stresses that its processes are ISO 9001 certified.
It’s this interaction that provides some kind of safeguard so when a consumer lands on the website and clearly needs something more personalised and complex than the online service is set up to provide, they can be identified and referred appropriately. It’s also provides a reality check, of sorts, to make sure that the advice provided is reasonable for the person receiving it.
Movo is not the first online advice service, but it’s an attempt to be be creative and to do something different – and others will undoubtedly follow as financial planning businesses start to develop new models that suit the needs of different groups of potential clients.
