Produced in partnership with Netwealth.
The advice gap and a difference in expectations between clients and their advisers are the two big challenges that Netwealth sees as shaping advice.
Netwealth CEO Matt Heine told the Netwealth Accelerate Summit in Melbourne on Thursday morning he hopes this the big picture issues he hopes the industry can work to solve.
“There’s some pretty scary stats out there and when we look at these stats…it’s obviously an opportunity but it’s also a big threat,” Heine said.
“In today’s environment for every one client that receives advice, there’s five that have unmet advice needs.
“There is currently around 800 Australians retiring every day. That number in the next 10 years is going to increase to three and a half million [who] have complex advice needs. By 2050, 7.3 [million people], or nearly 30 per cent of Australia is going to have complex advice needs.”
Heine said there’s only 11,000 advisers, referring to the unofficial industry estimate that excludes a segment of the approximately 15,500 advisers on the ASIC Financial Advisers Register who don’t offer holistic advice.
“What an incredible industry to be in that’s got supply and demand dynamics like that,” Heine said.
“However, how do we actually service those number of clients? How do we bridge that advice gap? How do we make sure that those five Australians that aren’t currently getting advice can get advice? It’s going to require everyone in this room to really commit to solving this challenge.”
Netwealth is hoping its partnership with Flux Finance can help with the intergenerational wealth transfer, which will see $3.5 trillion pass between generations, by helping build meaningful relationships with the children of clients before the wealth changes hands.
Netwealth acquired Flux last year and Heine said this has helped improve the firm’s understanding of how young Australians engage with their money – often it’s in short bursts, over their phone, with tools that are accessible and educational without being overwhelming.
Heine said the other area of focus in a “huge” client expectation gap.
“Our industry is notoriously slow at adopting innovation and yet we’ve just identified there’s a big gap,” Heine said.
“We need to become efficient, but clients are looking for better services. They want more regular communication, they want more reporting, they want to be able to have a digital and interactive experience with their adviser.
“These are all things that we take for granted as we deal with social media, our banks, Uber, any of those services where it’s real-time information [coming] back to us when we want it, where we want it, how we want it. They are the sort of services we need to deliver to our customers.”
Netwealth acquired data and analytics software provider Xeppo last year, which has since re-branded to Unify, and Heine said the insights it provides not only help advice practices using the platform but add a layer of oversight for licensees as well.
“From a licensee perspective…you can look at all of the practices in your licensee from a compliance perspective,” Heine said.
“You can start to get data around [whether] someone received a fee but maybe has not provided an SOA; where is all the money sitting from a licensee perspective; what platforms, insurers et cetera. This is really important to us, and we want to make sure that whilst this is very differentiated and different to what we’re doing on the platform side.”
The platform provider now has $120 billion in funds under administration, an increase of 25 per cent since at the end of FY24.
Heine said Netwealth has also made improvements to its managed accounts service which will offer model-level reporting, support for private assets and “smarter” rebalancing.
Later this year there will also be a launch of Netwealth Private, a purpose‑built solution for wholesale advisers.
