Eugene Ardino (left) and Dean Holmes

The world of general advice looks poised to evolve following the Quality of Advice Review.

Amongst the raft of changes from the government response to the QAR will see red tape reduced for advisers and the controversial call to give super funds to give more freedom to give an expanded remit to provide financial advice, which make up stream one and two of the reforms.

Stream three will involve future consultation on broadening the definition of personal advice (QAR recommendation one), removing the general advice warning (recommendation two) and allowing non-relevant providers to provide personal advice (recommendation three).

Lifespan Financial Planning CEO Eugene Ardino says any changes are likely to leave general advice extremely limited to things that are generic or statements made to people whom you have no personal information about.

“I think general advice will largely be replaced by personal advice that can be provided by non-relevant providers employed by super funds and possibly Australian financial services licensees,” he tells Professional Planner.

“In any case, as QAR is implemented, I believe the government does intend to create a framework allowing certain non-relevant providers to provide simple advice that many consumers cannot get access to under the current framework because non-relevant providers cannot provide it and relevant providers find that it isn’t commercial to provide it much of the time.”

Sydney-based Wealth Network co-founder Dean Holmes believes the evolution of general advice will depend on how much information different service providers have on their customers.

“There will be a variety of players coming in, but it will be centred around having customer information and then having machine learning algorithms that can be run off the top of that to help people make decisions,” he says.

“The banks have a lot of financial information on clients and their spending activities. Google and Apple also have information on spending activities given so many people pay for things with their mobile phones.

Holmes adds superannuation funds have some information on their customers, but not enough.

“They might know customers’ age, life stage and whether they’re getting employer contributions, but they know nothing about their assets outside of superannuation, cash flow, goals and objectives, family status and spending activities,” Holmes says.

Holmes believes that super funds will need to upskill and boost the amount of information they have on customers if they want to give advice as opposed to general information.

“They would have to in that regard and we’re not sure that consumers trust the super funds to give them extra information,” Holmes says.

However, Ardino believes super funds are well-placed to provide scaled advice to their members.