Technology closes in on planners

It won’t be long before a host of Australian Internet sites will being doing many of the tasks that keep financial planners busy. But, according to Hillross Financial Services managing director Jonathan Harrison, planners are not about to become extinct.

It won’t be long before a host of Australian Internet sites will being doing many of the tasks that keep financial planners busy. But, according to Hillross Financial Services managing director Jonathan Harrison, planners are not about to become extinct.

From mortgage calculators, insurance quotation services and unit trust bucket shops to on-line share trading and banking, financial services are increasingly being offered on the Net.

There are, for example, sites in the United States which assist with accounting and reporting, as well as with tax planning and tax returns.

And, Harrison, a speaker at the AiC Worldwide Money Management Financial Planning Solutions Summit 2000, expects many of the approaches used in the US to be copied or brought into Australia.

He adds that the proliferation of self help web tools, combined with Australia’s high rates of Internet usage and a willingness amongst younger people to use the Net begs the question as to whether the days of financial planners are numbered.

Today’s market place, he says, is generally seen as being divided amongst three groups (each with about a third share): the hard and fast do-it-yourself types, the “delegators” who have no interest in managing their financial affairs and the “confirmers”, who do much themselves, but consult a financial planner every so often to see if they are on the right track.

Harrison says it is unknown as to whether there will increasingly be a shift towards DIY financial planning, helped along by a younger generation which is often more comfortable with computers than personal interaction as well as by the rising number of retired people who spend more of their leisure time surfing the Net.

But he does believe that there will always be a place for financial planners.

“The superannuation and general investment and legal environment in Australia is extremely complex and it is very easy to misplace one’s affairs and lose money if one doesn’t get good assistance,” Harrison says.

He adds that the new additions to the Internet will have to go a long way to replace the specialist knowledge and intelligence of financial planners.

As already seen in the medical profession, he says, technology is likely to give experts more leverage, rather than replace them.

The threat from technology, however, is that it allows planning tasks to be done more cheaply than financial planners can do them. There is, for example, a site in the US called Financial Engines which gives users unlimited access for $60 a year — a rate financial planners will find hard to beat.

As a result, Harrison says: “Financial planners will have to address the costs of providing their services. And, they can do this by increasing the level of their own usage of technology.”

Technology is, however, more likely to replace financial planners in the low value part of their work, leaving them more time to provide advice on other aspects like estate planning, debt reduction, tax planning, retirement strategies and income protection.

“Financial planners will concentrate on advice as opposed to transactions like placing funds and compiling reports,” Harrison says, adding that simple financial planning needs for the masses will increasingly be met by the Net.

He says very few adviser sites are likely to become destination sites on the Web. Instead, advisers will use their sites as “electronic business cards” to which they will direct potential clients.

But he notes: “There is every sign that person to person referrals are still the major means by which people establish an adequate source of advice for themselves.

“This means that in the future, building a brand name will be more powerful than building a web site which one hopes people will find.”