It has been confirmed that many superannuation funds see digital advice as a loss-leading tool via which they will channel members towards more comprehensive offerings for which they can charge.
The Association of Superannuation Funds of Australia (ASFA) has revealed in a response to the Australian Securities and Investments Commission (ASIC) consultation paper on regulating digital financial product advice, that many of its members see the provision of robo-advice as a means to an end.
“The trend appears to be that automated advice will become an additional service offering of the incumbent advice and product providers, many of whom are superannuation funds and ASFA members,” the submission said.
“The opportunity then for new fintech providers it seems, is to become a supplier and/or authorised representative of existing AFS [Australian financial services] licensees who remain responsible for the advice being delivered.”
The submission said it was envisaged that for superannuation funds, digital advice would most commonly be used to deliver “intra fund” advice, often at no cost to the member.
“Funds will absorb these costs in order to provide a member service and value-add in the context of having to compete in an environment increasingly becoming one of consumer choice,” it said.
“Funds are hoping that digital delivery of intra fund advice will provide a more effective means of engaging with members in a lower cost manner than they have in the past — face-to-face and/or over the phone,” the ASFA response said.
“Similarly, they are expecting that digital advice will be a first port of call for members seeking advice, later being channelled into more comprehensive offerings that will attract charge.”
The ASFA response suggests that ASIC needs to provide greater clarity around a number of issues, including the responsibility of a “person” in a digital advice process.
The response claims the ASIC guidance does not cover situations where a degree of “human” intervention occurs, and if that occurs, who can it be done by.
“It is our view that, accountability and responsibility is not removed by automation, however like traditional advice delivery channels those that support an advice process may not be a personal advice authority holder themselves,” the ASFA response said.
