Midwinter Chief Commercial Officer, Steve Davison and Head of Advice Sales, Stacey Cowan explore the world of digital advice and how technology holds the key to a scalable, compliant advice solution. This is a synopsis of their presentation for AFA Thrive Gold Coast Conference, 21 – 23 September 2022.
The advice opportunity is huge.
Only 1.8 million Australians, or 10% of adults, receive financial advice, according to the 2021 Investment Trends Financial Advice Report. A further 12.6 million people have unmet advice needs and 3.2 million want advice but are discouraged by the perception of high fees.
The industry has a compelling proposition for ongoing personal advice but has been unable to develop alternative options.
But the Quality of Advice Review may be the catalyst for change, with Treasury signalling its intention to make the regulatory framework more supportive of new forms of advice.
Part of that includes a review of the definitions and requirements for general versus personal advice.
When it comes to general advice, many advisers are (understandably) scared to seize the opportunity.
A key aim of the Quality of Advice Review is to improve understanding of the different regulatory requirements for general versus personal advice, so providers of advice can easily distinguish between the two.
Treasury recognises that this is likely to have a significant impact on advice affordability and accessibility by giving advisers greater confidence to pursue alternative advice models.
The Quality of Advice Review Issues Paper states: “Broadening the scope of general advice is likely to increase the amount of advice that is provided to people, due to the lower cost of providing general advice relative to personal advice”.
Theoretically, there is nothing stopping advisers from giving general advice now.
However, if advisers want the status bestowed by a profession, a scalable personal advice model may provide a more appropriate solution.
Advisers could offer digital advice for consumers with simple advice needs or improve the efficiency of delivering holistic advice through digitising the advice process.
Some advisers are already doing this, using technology to drive efficiencies and scale, but most are yet to grasp the full potential of extending their customer value proposition so that it truly puts them and their advice directly in the hands of their clients.
Waiting for the Quality of Advice Review Final Report due in December – then waiting for enactment of any subsequent regulation or legislative changes that may or may not happen – is simply kicking the can down the road.
Advisers serious about growth can take steps now to scale their personal advice offering and meet evolving consumer needs.
Even if Treasury’s recommendations are favourable and the government implements reforms in a timely fashion, there is no such thing as a silver bullet. Like today, there will remain a degree of business risk in interpreting regulation and legislation.
Therefore, advisers should be taking action now to adopt technology that can drive efficiencies in their business, automate repetitive low value tasks, and increase their capacity to help more clients.
With adviser numbers falling, and a global skills shortage making it hard for businesses to recruit talented people, a supply and demand crisis is on the horizon.
In order to thrive, advice businesses need to get creative to increase their capability and capacity to provide advice.
If advisers don’t step up, the void will be filled by product manufacturers, finfluencers and social media, further undermining the importance of advice as a profession.
Technology holds the key to a scalable, compliant solution and there are already solutions available.
This session provides attendees with:
- An overview of general advice versus personal advice;
- Summary of key interim findings from the Quality of Advice Review;
- Understanding of the general advice opportunity and potential threats;
- Examples of how technology can help advisers drive business efficiencies and build a profitable scalable personal advice solution; and
- Midwinter’s vision to deliver technology that supports the way forward for advisers.
You can find the full conference agenda and details of Steve and Stacey’s presentation on the AFA Thrive website: www.afaconference.com.au/program.