The retreat of the banks left a gaping hole in the funding of development projects for advice, which has combined with increased regulatory constraints to make advice costly to provide and difficult for consumers to access.
With technology pegged as the only viable way to make the advice process more efficient for advisers, and more affordable for consumers, HUB24 and IOOF believe investing in solutions – and doing it the right way – is their responsibility.
Speaking on a panel at Professional Planner’s Licensee Summit in Katoomba Tuesday, chief executive of platform provider HUB24 Andrew Alcock described an industry left “in tatters” in terms of the infrastructure required to keep going after the banks’ retreat.
“We see every other industry move forward with technology,” Alcock told the assembled delegates. “I can find out when my washing machine’s finished on my phone… but we can’t solve the compliance issues.
“This industry needs infrastructure and investment,” the CEO continued. “whether you’re talking about client engagement or tech stacks for your back-office compliance, there’s a gap. We have to fill that gap and if we don’t work together to do that we’re not going to deliver on the promise.”
Sharing the stage, IOOF head of advice Darren Whereat agreed that WEXIT (the banks’ exit from wealth management) left a gaping hole in advice investment, particularly around technology.
Whereas the banks funnelled a lot of that investment towards building out platforms, however, Whereat reckons IOOF are bending their efforts towards making advice easier to provide.
“In our space it’s going to go all into advice, because that’s where we feel we can make the most difference to the client experience and to the preparation of advice,” Whereat said.
The industry is primed for technology investment, he explained, after the bloodletting of the Hayne royal commission, and well-positioned to overcome its regulatory hurdles.
“We’re two years out from the royal commission, and I think the industry has learnt a lot from it; the compliance hurdles are higher and there’s lower adviser numbers,” he said. “I think we as an industry have moved forward so we have to focus on growth, and technology in our view is going to be a huge enabler.”
A lot on the line
Both executives acknowledged that there is a lot on the line for providers in advice. As it stands, a large swathe of the industry are struggling to make the business of advice add up.
Allcock says the biggest challenge is finding easier paths to compliant advice delivery, which means figuring out ways to mitigate what many consider an overly burdensome compliance framework.
“The subtext is that the regulatory restraints designed to protect consumers – and this is all known to us – are actually restricting access to advice,” Alcock said. “We’re in a situation where the system we’re in is stopping us from being able to deliver what we need to deliver.”
Rather than bemoan the industry’s restraints, however, the CEO said he sees it as a chance to forge ahead using “co-opetition” and standardisation.
“I think there’s another opportunity for technology to consolidate data and actually take an open architecture approach, for example with [trustee] fee consent forms… are we working in a world where we’ve got a standard process?”
For IOOF’s part, a commitment has already been made to an uplift in technology via the Wealth Central advice tool it purchased in September 2020.
According to Whereat, getting it right at this point is crucial. “If we fail in the next three years advice will be for the rich,” he said. “And that will be a shame.”