MoneyGPS will roll out a white-label digital advice product to super funds to help mitigate the impact of a lagging response to the retirement income covenant.
The firm’s co-founder George Haramis has been in the financial services industry for 35 years working in advice practices and dealer groups and started MoneyGPS in 2019 to help solve the advice gap issue.
While the MoneyGPS service has largely been focused on helping give advice on the accumulation stage, Haramis believes they have developed a solution that will help in the retirement income advice aspect, which could assist with the trustee obligations in the covenant outside of product.
“What that will be able to do, in conjunction with our retirement tools is meet their obligations to deliver advice generally but as also as part of the Retirement Income Covenant,” Haramis says.
“What we’re currently building is a pre-retirement check-up report. That covers our full KYC [know your client] requirement, things like best interests’ duty and what have you to analyse someone’s situation for pre-retirement analysis.”
Additionally, they are developing a retirement income calculator/simulator with Deloitte.
“Deloitte do very good work in this area and we’re leveraging the stochastic modelling capabilities and overlaying our own requirements to that which will move into the retirement income SOA [statement of advice],” Haramis says.
“That will be a fully compliant, fully client-led journey. You won’t need an adviser to help you with that. It will cover TTR [transition to retirement], pension, look at the possibility to or the need to access home equity, maybe downsize and so on or if you needed to extend the time to work.”
Super funds are anticipated to take on a larger, more direct role in the advice process due to the government’s response the Quality of Advice Review.
Haramis notes the trepidation many funds have in the space, referring to the points made like those of IFS general manager for advice solutions Adrian Gervasoni made the Professional Planner Licensee Summit earlier this year.
When it comes to the current responsibilities trustees have under the covenant, ASIC, APRA and the government have criticised the response.
“Super funds were established to help people build their retirement nest egg, that’s what their focus is, now they’re being asked to offer advice to support the retirement income covenant requirements,” Haramis says.
“I get where [the regulators and government] is coming from, but I feel for the super funds because not only are they now asked to deliver advice. I feel for them.”
The pivot to offer more assistance isn’t unique in the space, Advice Intelligence – who are also part of the Australian Digital Advice Association with MoneyGPS – have re-configured their offering to target institutional clients after being acquired by GBST.
“Having discussed our services with a number of super funds it’s clear the super funds are focused on making sure they do the right thing, and they support their members in the accumulation stage, that’s why they’re there,” Haramis says.
“I don’t think they were ever established to deliver fully-fledged personal advice under an AFSL. That’s a secondary discussion.”
When MoneyGPS first launched, Haramis didn’t anticipate they would be able to develop a digital retirement income product.
“The tech is getting better day by day and our understanding and expertise in creating SOAs is building day by day,” Haramis says.
“It’s good news for everybody. It’s good news for those funds that don’t have an advice capability and its good news for those funds that do have an advice capability and that can be supported quite successfully with a digital offering.”
Under the hood
MoneyGPS has two options with how its service is used, either by the client firm giving the advice under the digital advice provider’s AFSL or their own.
“[Using an independent AFSL] adds another layer of complexity from a compliance point of view, but it means the super fund doesn’t need to have an in-house digital advisory business or service,” Haramis says.
“What we’ve decided to do is utilise the service ourselves because it’s so configurable and make it available to a whole host of organisations including super funds if they want to,” Haramis says.
“What that means is they’ll have their logos on there, their colours, it will be our licence that we use to deliver the digital advice capability.”
Haramis says what it won’t be able to do is adjust the rules the system uses to give advice, which will adhere to the digital advice provider’s algorithm as well as staying within the bounds of Australia’s regulatory requirements.
“But it means they will be able to deliver a very cost-effective digital advice service to their members, which is fully client led or supported by advisers if they want to, or our client services people, our GPS coaches.”
The white label service will be rolled out in the coming months.