Feature: Technology in 2017


By Daniel Paperny

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The burgeoning intelligence of adviser platforms and digital advice software has resulted in a greater pivot towards customer engagement and efficiency as financial planners look towards further avenues of automation, with smarter and more segmented advice technology solutions rising to the fore.

A key aspect of this has been an evolving Australian fintech and regulatory climate.

In the past 12 months, there has been a slew of government-backed fintech initiatives aimed at developing Australia’s regulatory framework and enabling innovation in Australia’s financial services sector, such as the unveiling of a national fintech taskforce and the introduction of ASIC’s regulatory sandbox licensing exemption for fintech start-ups.

While commercial partnerships between fintech start-ups and financial planning dealer groups continue to grow, 2017 may open up new possibilities in terms of what adviser platforms and digital advice offerings are capable of.

Hub24 chief executive Andrew Alcock believes evolving customer preferences have prompted advisers to look at new ways of using platforms to better demonstrate their value to clients and improve the overall client experience.

“In a world where compliance and client identification are becoming more complex, advisers are looking for efficiency [as well as] smarter technology solutions to implement portfolios of access, such as managed portfolios, to get greater transparency for their clients,” Alcock says.

“Advisers are looking for better client engagement tools which really make simulation for clients meaningful in terms of where they are with their goals and how they’re building their wealth.”

One key development in 2017 may be the emergence of the next iteration of digital advice offerings.

StatePlus general manager of financial planning and marketing Jason Andriessen regards digital advice as a "key plank” for overcoming a continued lack of trust in financial planners.

“Digital advice is capturing people’s imaginations because it is unbundling the value chain for financial planners - it creates many challenges but also opportunities for financial planners in terms of where their value lies,”Andriessen says.

“As the superannuation system matures, Australians will need access to advice and ... digital provides an extraordinary opportunity to engage people with their money decisions in the context of their super.”

Ignition Wealth chief executive Mark Fordree says the evolution of the technology and its broad acceptance in global markets has shown client acquisition is the key to success in digital advice.

“We believe that 2017 will be the year of the robo, when a critical mass of financial professionals will adopt a hybrid model, which we like to call robo-assisted advice,” Fordree predicts.

“There will be more automation, more data, better profiling and goal-based outcomes.”

However, Midwinter managing director Julian Plummer draws a distinction between robo-advice and digital advice solutions, saying that where many robo-offerings have based themselves around a basic risk profile questionnaire and exchanged-traded funds portfolio recommendations, digital advice should be treated as the "digitalisation of the advice journey”.

For Plummer, digital advice in 2017 will increasingly act as an adjunct to human financial advisers, a separate channel for clients to seamlessly navigate through multiple touchpoints of interaction when seeking advice.

“I think it has always been a challenge for pure robo-advice plays to establish trust with the consumer,” he says.

“It is important that the consumer is able to move between different channels easily and experience a consistent set of outputs regardless of channel.”

Alcock notes that while digital advice is in its relative infancy in Australia, there are many lessons to be learnt in viewing it as an adjunct to advisers.

“I don’t see robo-advice to have been compelling generally yet,” he says.

“The advice gap will be closer with robo-advisers, but we’ll always need a solution to human needs, and it’s equally important to have a human financial planner that can gauge and respond to the emotional and personal needs of clients.”

Plummer agrees, saying 2017 will mark the start of a transition away from risk profiling in digital advice as goals-based investing starts to come into favour.

“Risk profile questionnaires are designed to measure the risk tolerance of a person or entity, where goals-based investing allows for a far more granular understanding of risk profiles [with] regards to a specific strategy,” he says.

FPA head of policy and government relations Ben Marshan says in the coming year digital advice tools will start focusing more on an investor’s risk capacity instead of a simple risk profile, making a more intelligent and individualised assessment in terms of what risk they need to take with the investments they are making.

“Calculating someone’s risk tolerance is just the start of the conversation … [it] is more about figuring out how much education you need to provide a client around investing, as well as making sure they’re comfortable [with the advice],” Marshan says.

“There’ll be software like Midwinter’s Advice OS, Xplan and Coin that might form the hub [for advice], but where those players will lose out, and where they’ll have to adapt, is how they log into specific apps and tools that do a much better job of providing a specific part of that advice process.

“I can’t see a world where there will be a single tool that will do everything for you.”

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