Advisers, accountants and investors on BT’s Panorama platform will have access to Ignition Wealth’s digital advice solution from the third quarter of this year.
As BT continues the $600 million-plus rollout of Panorama, the deal with Ignition provides a potentially low-cost option for Panorama users to provide advice to clients generally considered to be lower in value.
And it also means that individuals who use Ignition Wealth’s digital advice service could end up with their investments managed and administered on the Panorama platform.
“It is possible, yes,” says Mark Fordree, chief executive of Ignition Wealth. “Anybody could log onto our website, register and go through that normal process. “Panorama is on our APL [approved product list]. You may not be able to do that today, because we’re just kicking this relationship off, but certainly going forward you’ll be able to do that.”
Fordree says it’s been estimated that about 5 million individuals are classified as “orphan clients”, paying for advice without receiving it.
“The only way to address this issue is via a digital solution,” he says. “We saw with ASIC’s fee-for-no-service [report] last September, that time is ticking on addressing these issues.”
He says Ignition Wealth will first target accountants, a large proportion of whom are “in a post-FoFA environment, unlicensed”.
“An existing accountant client, who’s previously perhaps received advice from the accountant, can be introduced to the Ignition Wealth solution by the accountant,” Fordree says. “They will go through a normal Ignition Wealth experience, from identification of who the person is, data collection, generating a risk profile, understanding what their goals and aspirations are [and] generating the appropriate portfolio – which may or may not include the BT solution – bearing in mind that best interests have got to drive this.”
Fordree says all financial planners will eventually need to offer a digital advice option to clients. Targeting platforms or developing relationships like Ignition has with the 5000-member Pharmacy Alliance are efficient ways to deliver affordable advice to large numbers of individuals.
“The cost of customer acquisition, as demonstrated in the US, is very high, and I don’t think any of the digital advice engines in Australia have a capital base that could support that,” he says.
“Our strategy has been, for the past eight years, a B2B offering. We’ve just recently moved away from being solely industry fund-focused.”
Fordree says Ignition Wealth has provided more than 1 million “advice journeys” – pieces of advice that range from intra-fund advice through to more comprehensive advice requiring a Statement of Advice (SoA).
He says there’s a misguided assumption that digital or robo-advice services are best suited only to low-value clients.
“As we look forward [advice businesses] have all got to either build, buy or partner to have a digital solution, certainly for the bottom half of their client base,” he says. “Eventually the whole client base will go through a digital journey.”
Fordree says the acceptance of digital advice will follow a similar path to online stockbroking. He says there was initially a belief that the take-up would be low “because everyone’s going to want to speak to somebody”.
“But 15 years later, it’s got 75 per cent of the market,” he says. “The price point to receive advice is going to fall dramatically, which means the advised market is going to grow dramatically. Rather than being limited to 15 per cent, we see it moving to 40 per cent.”
Fordree says Ignition Wealth itself will provide financial advice under its own Australian financial services licence (AFSL), and will charge clients between $15 and $50 a month, depending on the level of service they want.
“The client can opt into human advice at any time, should they require it,” he says. “We’re having interesting conversations with insurance companies, with mortgage brokers. One of the keys here is we have our own AFSL.”
