The online financial advice service MapMyPlan has obtained its own Australian financial services licence (AFSL) in a process that illustrates how ingrained product advice is to the Australian regulatory regime.
The online service, which does not make product recommendations to individuals, nor recommend investment portfolios, was previously an authorised representative of Dover, but the managing director of MapMyPlan, Paul Feeney, says it decided to obtain its own AFSL to help smooth the process of offering its services to commercial partners.
Feeney says the application process threw up some challenges along the way and the process took about seven months, from application to conclusion.
“We went through the whole process, and it almost felt like ‘computer says no’,” Feeney says.
“It was like, hang on, you guys are fully automated, and you do not sell product. This is so outside the scope of a normal request for a licence that we really had to go through everything.”
Feeney says MapMyPlan worked with The Fold Legal and Pathway Licensee Services to submit its application, and “those guys got us as far as they could”.
“But then ASIC kept coming back and asking minute questions here and there,” he says.
“Eventually we said, let’s go and talk to the financial advisory team.”
Feeney says the regulator accepted that MapMyPlan’s proposition does not cover product, but insisted that the service still produce a statement of advice for clients.
“The sticking point was that ultimately we need to produce a snapshot statement of advice – an actual document that someone can download and you can deliver by email,” Feeney says.
A different kind of robo-adviser
It was as though the licensing process and the regulatory framework could not cope when faced with an advice model that did not incorporate product advice or recommendations.
“I’m reluctant to make that call, but we didn’t get our licence until we could show that yes, we can produce an SoA on demand,” Feeney says.
“We’re a bit different to the robo-adviser where it is all product-led. Ours is all strategic conversations. We start off, every single person has to answer the question, ‘Do you pay your credit cards off each month?’. And we take you through that module. Then, building an emergency fund – or a holiday fund or whatever you want to call it – and do you have protection in place? We call those the three foundation modules.
“The other one that’s universal is my super. I don’t use ‘My Super’ the way the industry does; it’s from an individual’s perspective – it’s my super. Those four things we go through and all we do is ask questions about the current state of your circumstances.”
Feeney says that financial planning, at its core, is essentially a simple proposition.
“You’ve got lump-sum money and monthly money – how do you allocate it, based on your goals?” he says.
“We gather data slowly but surely. And in protection, for example, we do not tell people to go and get Zurich life insurance. We give people information so they can go out and do it themselves or go to a broker or go to an adviser or go to your super fund – and here’s the pros and cons of each – and at least get your insurance sorted.”
Influencing decisions
Feeney says that ASIC’s perspective on the service was that “well, you’re influencing a product category and whether people participate in that, and therefore you’re influencing a decision”.
“We said, OK,” Feeney says.
“In my view, if I’m sitting down with a stranger in a bar and I say tell me about your salary, your credit card debt, your home loan and your super, I don’t really care what the [legal] definition is, to the average Joe on the street that’s personal advice. So that’s why we went and got the licence, to enable us to give that personal advice.”
Feeney says MapMyPlan produces an SoA in the guise of a “roadmap”, based on the information it gathers from clients.
“ASIC is telling us we have to have the words ‘statement of advice’ up there so we do; but we’re calling this ‘your financial roadmap’,” he says.
“All it does is look at the main dashboard of each individual goal and scrapes that, and puts in into a document. It’s all your fact-find information and demographic information. It’s an 11-page document, at most.”
Feeney says that while MapMyPlan is “never going to go into the realm of selling an actual product, [our own AFSL] enables us to be unshackled, I suppose, of anyone else’s influence of how we put our proposition forward”.
The responsible manager for MapMyPlan’s AFSL is Simon Micallef, principal of the consulting firm FinFocus, who recently assisted Suncorp to close down its Guardian Advice and Suncorp Financial Planning operations.
“Since I’ve been overseas for a while, I do not have the three-years-out-of-the-past-five advice experience,” Feeney says.
“When I get my exposure to retail investors up, I’ll join him as the responsible manager.”
