Digital advice will not replace advisers, it will augment them and enhance their capabilities, the Minister for Superannuation, Financial Services and the Digital Economy, Jane Hume told the AFA Evolve Conference.
She told the 450+ virtual attendees that digital advice means advisers will be able to “…better serve more clients at lower costs, helping make advice more affordable and accessible than ever.”
She outlined two ideas of digital advice – robo-advice, where the consumer interacts exclusively with a software program, or a bot, which takes their information and processes it to provide advice.
The second is what she calls digitally augmented advice.
“This might mean, for example, that the customer inputs their information into an online tool, and the software behind it creates the basis for a Statement of Advice. It might also mean automated compliance functions and checks.”
Hume says both of these will ultimately make advice more accessible and affordable.
“The digitally augmented advice is self-explanatory – advisers can spend less time collecting information, making sure they are compliant, and putting together the basic pieces of advice and focus on the value-add.”
And, she says, human advisers can do the things that machines cannot do very well “…manage clients in times of stress, understand in a nuanced way what their needs and desires might be, and be a human voice to explain complicated financial decisions to clients.”
She noted later in her address that while no one has yet cracked the nut of full service robo-advice, when someone does “… I also don’t think robo-advisers are going to replace the 18,000 or so financial advisers practicing in this country.”
…robo-advice and other digital tools will offer an alternative for people who don’t currently have access to an adviser…
Hume says robo-advice and other digital tools will offer an alternative for people who don’t currently have access to an adviser, or who wouldn’t pay for an adviser.
She says many young people would prefer to first engage with an app than a human.
But as their financial circumstances become more complex, as they become more affluent, have more assets, they will then seek out more complete services “…an adviser who can provide the additional value-add, and tailored understanding of their personal situation.”
She says that robo-advice should not cause concern, “…it should make you excited at the opportunity you have to create a fantastic pipeline of clients for full service advice.”
As to what this means for policy and regulatory settings, Hume says she wants to make sure that there are no impediments to using technology to provide, or help provide, financial advice.
“I want us to be in a place where the regulator can tick off a piece of software or an algorithm and say ‘if it fulfils these criteria and is used in this way, then it is compliant’.”