Complexity still a hurdle for robo-advisers

Consumers still see robo providers as lacking the personal touch needed for complex advice.

15-Jun-2016

By Daniel Paperny

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The superannuation industry was moving towards embracing goals-based advice offerings that provided personal advice to customers, but that was yet to be fully realised and delivered in the realm of robo-advice, according to StatePlus.

Speaking as part of a panel discussion hosted by King and Wood Mallesons yesterday, StatePlus general manager of business development James Panaretos noted the evolution of robo-advice in Australia could see it become an adjunct to traditional advice services, particularly in the intra-fund space.

However, Panaretos questioned what the future held for robo-advice in the comprehensive advice space, which he argued was “almost invariably” provided face-to-face.

“What we’ve observed in the superannuation industry is that the take up of comprehensive advice is very low,” he said.

“Most consumers, when it comes to really complex financial advice, will not trust a computer. Our view is that face-to-face trust will never be replaced by robo-advice when it comes to the provision of comprehensive advice.”

He noted that traditionally comprehensive advice was not “well promoted” to fund members and was often regarded as “a very expensive solution” for super funds to introduce, which was where there was a great opportunity for automated solutions if perceptions around robo-advice could be changed.

“Is robo-advice a channelling tool to get more people into comprehensive advice or is it a tool in its own right to provide financial advice, the be all and end all,” he said.

“One view is that in the superannuation space, robo-advice will fill the intra-fund void. It will be the tool to deliver intra-fund advice.”

Midwinter managing director Julian Plummer said there was a ripe opportunity for robo-advice in the super sector, given self-managed super funds were regulated by the Australian Taxation Office and not an Australian Prudential Regulation Authority (APRA) registrable super entity.

APRA-reporting super funds, on the other hand, possessed a significant advantage in being able to provide inexpensive advice quickly, he said.

“I think the future of digital advice is definitely within superannuation … where a superannuation trustee can provide simple advice topics to members where the cost of the advice is borne by the fund,” he said.

“What good robo-advice tools now are doing is that for every objective you have, they have a different risk profile [and] they also have a good stochastic engine.

“This can help you go from conversations [with] ‘phone book’ numbers to the real probability of meeting goals [and] that’s far more palatable for consumers to digest.”

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