Eric Blewitt (left), Daniel Shrimski, Andrew Alcock and Neil Younger. Photo: Jack Smith.

While the Delivering Better Financial Outcomes package may deliver some efficiency gains, the advice industry needs more investment in technology to drive productivity, the Professional Planner Licensee Summit has heard.

HUB24 managing director Andrew Alcock said the opportunity for licensees and advisers in the country right now is “getting our act together” for where to invest, to help advice practices with customer engagement and improved processes to help advisers reach 180 to 240 clients each.

“The ability to do that and leverage technology to unlock value like other industries in a country where we’ve had a lack of investment – partly because of all the changes we’ve gone through – that’s a massive opportunity to deal with the issues that we’ve talked about for a long time about the sustainability of licensees, [and] the cost and accessibility of advice,” Alcock said.

However, Alcock said this can only be done by working with the regulators, Treasury, technology and service providers, licensees and practices to help serve C and D clients and look after the intergenerational wealth transfer.

“We are under-invested by about 50 per cent in this country, let’s fix it,” Alcock said.

Fortnum CEO Neil Younger said the industry is past the bottom of the curve and on the way back up and the challenge is to look for the next capacity opportunity for the industry.

“That feels like a better place to be than on the way down that many of us have participated in for the last number of years,” Younger said, alluding to the impact of the Hayne royal commission and reforms to introduce higher professional standards to the industry.

Younger said the number of clients per adviser used to be roughly 200 but has fallen to 110, and this needed to be reversed.

“Advisers have responded to that in the right way, they’ve pushed their price up and maintained their margin but that’s not about growth,” Younger said.

“That part of the cycle has finished. How do advisers think about the next layer of growth? How do you push from 110 clients back up to 200 clients and the opportunity for us to add capacity back into the system?”

Younger said technology will play a significant role and AI will be the “most significant step change” this industry will face for the next period.

“Those that have the capacity, not just to take off the shelf technology, but to apply it in the correct way to the process of delivering advice will win,” Younger said.

“That’s where licensees have a distinct opportunity but also a distinct advantage if they’re sufficiently scaled to be able to deliver that relevance in terms of what advisers are able to use.”

Outside of technology and investment the participants of the panel are still hopeful of seeing efficiency gains through the Delivering Better Financial Outcomes legislation, the government’s response to the Quality of Advice Review recommendations, despite some stumbles over advice fee deductions and various drafting errors.

Investment Trends CEO Eric Blewitt said his research shows one of the most cited factors that will improve adviser capacity will be changes to fee consent requirements which will streamline the regime to require a single mandated form.

“Over a third of the market say that consumes a significant amount of time, and 83 per cent of them actually turn around and say that’d be an exceptionally good thing,” Blewitt said. “That’s a big drain on advice businesses at the moment.”

Furthermore, Blewitt said research that will be released shortly has found the advisers that stayed in the industry post-royal commission are running “extremely successful, profitable practices”, findings similar to Adviser Ratings research released this week.

“Advice practices are saying they are more profitable this year than they were last year, and over 50 per cent of the market is effectively saying that,” Blewitt said.

Pointing back to research done with CoreData earlier this year, Vanguard Australia managing director Daniel Shrimski said an additional 14,000 advisers will be needed to solve the advice gap.

“We’ve almost got the perfect storm for the industry we’ve got to solve for,” Shrimski said.

He noted three things the industry needed: making the profession attractive to entice more people to join; scaling advice practices; and how to better service so-called C and D clients.

Shrimski said licensees have a “massive role” to play in providing in-house services to help advice practices achieve scale.

“Asset managers and consultants also have a role to play in that, in terms of tools and practice management, and education and global perspectives,” Shrimski said.

He added that practices may also need to apply different models to their business to help take on more C and D clients.

“Maybe they need to apply different models, like one-off advice or moments-that-matter-type advice, and incubate those type of clients in a low-cost, low-touch model that can ready them for when they are the A and B clients of tomorrow,” Shrimski said.

However, Shrimski reiterated the organisation’s current position that it will not offer advice in any capacity and continue to rely on adviser relationships.

“We’ve got too much on our plate – we’re trying to scale a superannuation fund that is at $1.5 billion,” Shrimski said, referring to the super fund the wealth giant launched in late 2022.

“Our focus is on that and on working with advisers. We don’t have any plans for launching a digital advice offer in Australia. It’s been successful in the US but there will be many folks that try to launch digital solutions and that’s a good thing.”

One comment on “Industry underinvestment has caused productivity losses”
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    Interesting debate that the leaders talk about garnering scale with c&d clients and engineering growth in this area. However every comment related to yesterday’s model of face to face engagement which clearly doesn’t work.
    One would have hoped that at least one visionary would have seen full digital advice as a scale able solution to making advice affordable and accessible. It’s available now with full personal advice and full consumer protection and yet not one of the speakers supports it with their business model. Bizzarre or what ?

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