‘Industry needs to get smarter faster’: Capital Preferences
Capital Preferences is launching a program in Australia with several advice firms to uncover the risk preferences of their clients and their investments and how they match with portfolios.
The research and technology firm would launch a pilot program at the end of April and expand it widely in June.
This would examine the risk preferences of advisers’ clients, using the firm’s behavioural software, and whether they matched with their investments that had been allocated based on the advisers’ current risk questionnaires.
Bernard Del Rey, chief executive at Capital Preferences, said: “The questionnaires used are meaningless, they don’t help the client, the client doesn’t understand it or find it engaging and it’s a Stone Age method. The adviser doesn’t value it either as they see it as a tickbox method, it’s a wasted opportunity so we are trying to turn it into a high value opportunity.
“There were instances where clients were surprised by their own preferences. What’s right for them varies by person, it’s all about preferences.”
Del Rey, who was based in New Zealand, noted Australia’s Quality of Advice Review was heading in the right direction but felt it had “missed an opportunity” to highlight the value of diagnostic tools.
“The Quality of Advice Review missed an opportunity to impress the importance of diagnostics to make advisers more flexible. It was a lost opportunity to focus on obligations to keep on top of diagnostics to understand the client.
“Hybrid and robo-advice focuses on efficiency rather than on the quality of advice.
“There are many good advisers in Australia but far too few, it would be silly to think you can apply that method to millions. You need to reinvent the advice method using sophisticated diagnostics and scientific methods, the whole industry needs to get smarter faster.”
However, he acknowledged this would be difficult as there was a lack of innovation in the technology space and too few major players.
AUTHOR
Laura Dew
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