How can the industry reinvigorate financial advice?

As the industry waits with bated breath to see the final recommendations coming out of the Quality of Advice Review, two former senior advisers have explored ways to reinvigorate the industry and broaden its reach beyond a traditional older client base.

Co-authors Harry Chemay and Brett Ebedes had a combined 47 years in the industry and written a white paper entitled "Australian Wealth Management at the Crossroads - Where to from Here?” 

Chemay spent a decade in financial planning before co-founding a digital advice provider while Ebedes was a former director of wealth management at a bank and spent a decade at Iress.

Among their recommendations was the use of technology to drive a new era of increased advice productivity.

“The way the advice sector responded to the COVID lockdowns of 2020/21 shows just how innovative Australian financial planners can be,” said Chemay. 

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“A sector built on personal rapport and face-to-face interactions pivoted almost overnight to delivering advice online via a range of digital tools, including online meeting apps, digital document delivery and e-signature solutions. Australian advisers stepped up with technology-led solutions and delivered.”

Adopting technology such as digital advice would help drive down the cost of accessing financial advice and deliver it to more consumers, they argued, while elaborating that the advice experience should be viewed as a spectrum from simple advice to the highly-complex scenarios of Ultra High Net Worth (UHNW) clients which required professional judgement.

“There is no one-size fits all when it comes to digital advice. It is horses for courses, and advice providers need to understand where it can be best applied to optimise productivity, enhance advice quality and improve client outcomes,” Chemay added.

Another key factor was the recognition that Australians engaged with the financial services sector across multiple decades in ways that shifted over that timespan and a well-rounded sector would have a range of viable alternatives to attaining advice.

Beyond measures like investment magazines, online financial information sites, and government initiatives like the MoneySmart website from ASIC, “robust, engaging, appropriately regulated and inexpensive” non-traditional alternatives like robo-advice or next-generation investor-directed portfolio services (IDPS) would be beneficial.

The white paper stated: “These solutions point to a hybrid advice future, where the interaction between consumer and adviser might evolve along a spectrum over time, starting with a highly digital, near self-serve model and evolving toward a human-centric relationship as retirement approaches.

“Beyond the constraints of the current legislative edifice, the concepts of ‘guidance’ and ‘assistance’ should be brought in from the cold to sit in between general/personal advice on the one hand and factual information on the other.”

The paper called for the overarching financial services industry to band together to address trust issues and highlight the importance of being in control of your finances.

“The call to action is for fund managers, platform providers, insurance companies, advice technology providers and other significant industry suppliers to unite with advisers to create awareness. To band together and promote what advice is, where to get it and how it is beneficial. 

“There is a clear problem and an opportunity to do something about it. Stakeholders who have a vested interest in their own success, and equally importantly helping end consumers through their products and services, need to work together and do so now,” it stated.