Confusion and frustration in modern times

The COVID-19 pandemic has been a catalyst that has brought forward technological advances years earlier than otherwise might have happened.

The world entered the Zoom-era where meetings could happen remotely and for advisers, this was essential in keeping some form of face-to-face meetings with clients.

However, although there were solutions brought on to fix issues created by the pandemic, many other existential issues faced by the industry were not addressed with the same sense of urgency, particularly when it came to the accessibility of advice.

As more advisers leave the industry, the remaining advisers will be expected to cover a broader base of clients. How technology could help in this aspect was by improving workflow, as well as automation, which would be crucial when it came to dealing with a larger scale of clients.

Mike Giles, Ignition Advice chief executive, said the main problem with the accessibility of advice that needed to be addressed was the cost and scale of its delivery.

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“More consumers than ever need help making financial decisions, advice professionals are expensive, and they can really only help a limited number of people each year,” Giles said.

“Which is why advisers tend to only engage with the sort of top end and only the top 10% of the market gets advised with regular retail customers not getting advice.”

Giles said the problem was customers needed help making decisions, and the cost of its delivery and its ability to scale were challenges, which was why technology was needed to help.

“Technology enables the customer to become the central part of the workflow, at the moment when an adviser does the work it’s all very adviser-centric, they’re doing all the heavy lifting,” Giles said.

“When you pour technology in, suddenly customers can actually get into the process and do some or even all of the process.”

Shannon Bernasconi, WealthO2 managing director, said the climate for technology had changed as banks departed advice and the end of vertically integrated institutional models meant more flexibility in how technology could be adapted.

“[The banks] dominated, and therefore they didn’t invest and they stifled innovation, so that’s the one point of inflection we’re seeing,” Bernasconi said.

“Other parts of the world have really shone in fintech usage, compared to Australia – and that isn’t just because we aren’t great at fintech – it’s because we had that dominant vertical integration and [the banks] didn’t need to do anything.”

Emily Chen, Iress global head of product, said technology presented an opportunity for firms to assess and access the next generation of customers so they could service more clients in the future.

“To make advice more accessible, we probably need to shift left and to achieve this, advisers need to be able to service more customers without adding cost and administration to the process,” Chen said.

“Even before talking about engaging new customers, the focus around automation, how technology can help create infrastructure as well as engagement tools to actually help them meet the needs.

“There’s a range of personal advice options, like scaled advice, which has been a concept that’s been around for a long time.”

Chen said one of the ways technology could be a benefit was by making advice automated and cheaper for people to access.

“When we think about cheaper in a technology sense, it’s about how to be more efficient, how to let the systems and technology do more, rather than having humans in front of computer screens,” Chen said.

Chen said an example was the legislation around advice fee consents and how this process could be automated by technology.

“As an example, without technology, advisers would have to manually access fee consent – getting signatures from their clients, saving that and filing it for compliance purposes, before passing each of the fee consent account details to each of the product platforms to wrap up the review process,” Chen said.

“They have to do this every year for every client that’s paying ongoing fees – how technology could help in this example includes both engagement and those compliance components.”

Chen said the infrastructure Iress had created around this allowed advisers to automatically send fee consent forms which would only require a digital signature.

“That’s completely automated, and saved back into the CRM [customer relationship management system] and through the utility that was built using blockchain, it goes through the product platforms without human touch,” Chen said.

“So rather than the adviser sitting in front of the computer and having to send multiple emails to and from the client to and from each of the platforms, we let technology drive that automation through workflow.

“Connecting the industry is also quite key, advisers use [on average] 2.5 product platforms, so that’s lots of paperwork if technology wasn’t there to help facilitate on fee consent.”

Jeff Hall, Midwinter chief operating officer, said they wanted to change the vernacular on the topic.

“It should be not how many advisers you actually have, but how many customers can you actually reach and serve,” Hall said. 

“That’s where tech comes in for the different groups, whether that’s a super fund or an independent financial adviser.

“We need to start making it more efficient for them to actually start being able to offer lower cost options, being able to educate and simplify the process.”

Demographically, Hall said it was important for advisers to be connected with everybody.

“It doesn’t matter what demographic people are from, they all like to interact differently,” Hall said.

“There’s the myth the older generations don’t like to do anything with tech, but the stats are proving that wrong these days – a lot of the tech savvy are the older generation.

“They are happy to take the time to look into things when they want to research and understand.”

Hall said the key to accessibility was having clients being able to start inputting their information, and being able to then investigate and look at all their documents in one place.

“It’s making it easier for people to monitor and collect information, which saves the adviser time,” Hall said.

“It’s having that single point of entry that everything should flow through, so omnichannel – which is a buzzword people are using – but they should be able to jump in at any point whether they want to use a telephone or a portal.

“But if they get halfway through the journey and they do feel they want to speak with somebody, then they should be able to.”

Ben Marshan, Financial Planning Association of Australia (FPA) head of policy, strategy and innovation, said the benefits of using more technology in the advice process were that it could make advice more affordable, engaging and cost-effective to provide.

However, he said there were two things holding back accessibility of advice.

“Number one, there’s an integration issue and so a lot of the technology at the moment doesn’t integrate easily with each other,” Marshan said.

“There are different pieces of technology that will solve parts of the advice process really well, but if you can’t move the data from one spot to another then it defeats the purpose of using it.

“Secondly, there’s been so much change in financial services over the last seven or eight years that unless you have a reasonably-sized business or licensee to sit back and have a look at your processes, it’s a time-consuming process.”

REGULATION AND SCALED ADVICE

Scaled advice could also help with accessibility of advice, but advisers had trepidation over whether they could fulfil regulatory requirements. 

However, Marshan said regulation was not a factor holding back the use of technology in scaled advice.

“Tech itself doesn’t improve the ability to provide scaled advice, per se,” Marshan said.

“The things that are holding people back from providing scaled advice don’t change just because you have technology in the mix.

“But technology allows you to collect information more quickly and allows you to use that information more efficiently, it allows you to deliver the advice more efficiently and all of that makes it more affordable and quicker.”
Marshan said all the regulators told him they were comfortable with scaled advice being provided.

“It’s this myth we’ve created in our minds – this fear the regulator isn’t saying what they actually mean – that’s stopping us from taking advantage of the opportunities that are there,” Marshan said.

“I regularly meet with the regulators, I have regular conversations with them, I regularly test their thinking and meaning – they’re genuine in saying ‘we’re happy for scaled advice to be provided’.”

However, from an adviser perspective, Hall said compliance was still an issue because of the cost to comfortably be able to implement it.

“Technology is able to help with the compliance side of the world; if we can reduce the burden on the planner, ensuring they are keeping within their licenses, we can do the heavy lifting on monitoring the clients and generating the documents, collecting the data,” Hall said.

“Technology is there to help with simplification, to make it easy for the adviser to spend more time with a client and less time meeting their compliance and regulatory obligations.”

POST-COVID FUTURE

Before the COVID-19 pandemic, Chen said they talked to customers about how they would transition from the traditional business to digital models. However, COVID-19 accelerated the need to support a hybrid working system with digital at the centre.

When it came to post-COVID changes that were still needed in the industry, Chen said a goal was to eliminate paperwork entirely.

“This will extend into things like digital statements of advice (SoAs), so bringing to life the advice and provide it in a more interactive and visual way,” Chen said.

“There’s a lot of conversations around infrastructure and how to engage customers through automation.

“We will see a lot more engagement tools created as part of this process, how advisers may want to communicate with customers will change.”

Marshan said there was a massive opportunity coming through with the consumer data right (CDR) and the availability of tools the client could give when it came to the authority to collect their data directly from banks and other financial institutions.

“We have forever been asking clients to bring in their financial statements and information about their financial position, and then manually going through that, copying it into whatever systems we are using,” Marshan said.

“There’s a lot of opportunity to instead collect that digitally from the client, which would save time and effort doing it on [the adviser] end.”

Hall said during COVID-19, they looked at ‘robo-servicing’ for advisers to help them manage their day-to-day work.

“Compliance is another big one that we’re going to continue to build out; we’ve doubled-down on that during COVID-19,” Hall said.

“But the biggest pain point for advisers is still all the regulation and compliance they need to do, so the simplification of that and helping in that space is quite key.

“That’s lowering the cost for advice and making it simpler for both the adviser and the client.”
Giles said advice was still a ‘siloed world’ where systems were still often too compartmentalised and isolated from each other.

“One of the reasons it’s so painful is that it’s rarely integrated into financial transaction systems,” Giles said.

“When people come online, they expect they don’t have to re-key all the same information and they get frustrated with that. That requires more openness in terms of technology transfers, open banking is probably an area that’s going to start making changes.”

Giles said COVID-19 began the push towards adapting technology quickly and showed it was a reasonable goal for businesses.

“Data privacy is the other area that really needs to catch up, because we deliver into Europe we fall under the GDPR [General Data Privacy Protection] rules, which are very strong,” Giles said.

“That’s built a digital confidence in Europe and we have to be equally as strong here.”