The future is bright

Ashley Mahadeea

AFA Gen Next National Chair

There is a systemic change in consumer demand for financial advice where for the first time, demand for advice exceeds supply.

Demand is increasing as a result of general consumer anxiety caused by Covid19 and financial advisers are in pole position to grow their client bases by demonstrating value.

On top of this, if some of the QAR recommendations are rapidly implemented, the industry will have regulatory tailwinds for once, after many years of added compliance burden. The latter still represents the biggest challenge for financial advisers.

With technology continually adding more efficiencies to practices, we have seen a growing adoption of digital advice solutions by financial advisers, using AdviceTech to showcase the value of advice.

Demand for advice

Trust for financial advisers is at its highest since the Hayne Royal Commission and this has led to an increase in demand for financial advice. 2.6 million non-advised Australians are reported to seek advice in the next two years. Covid19 has been a catalyst in the increased demand for financial advice with Australians understanding that financial advice is not merely about increasing investment returns or managing investment portfolios.

Financial advisers have been able to demonstrate the overall contribution they make to financial literacy, decision-making and mental wellbeing. Unfortunately, there is still a huge gap between what most Australians are willing to pay versus the fees charged by advisers. Advice practices that, think outside the box and roll out low-cost digital solutions or create membership fee-based models, will be able to attract a new generation of advisory clients. Creativity is not a word we often associate with financial advice, however I truly believe that advice practices that champion entrepreneurship and creativity in delivering new and bold advice propositions for more Australians, will steer ahead.

Can financial advisers look after more than 15-20 % of the Australian adult population and narrow the advice gap? Yes they can.

Regulatory tailwinds

I have been in financial advice for over 10 years now and this is the first time I am seeing regulatory tailwinds for our industry. The proposals to remove the requirement for SOAs & FSGs, simplified Design and Distribution Obligations and an overall focus on streamlining regulatory compliance to reduce costs and duplications represent a great step forward for advice practices. If those recommendations are effectively implemented by the government, we could see a major shift in the way advice is provided in this country. Achieving the right balance between affordability and accessibility on one hand and adequate consumer protection is key to making Michelle Levy’s regulatory changes a success.

The proposal to have a clear demarcation between a professional adviser and an ‘agent’ working for a product provider (or non-relevant providers) should be saluted. Professional advisers should hold no fear of ‘losing business’ to an ‘agent’ but rather appreciate that the ‘agent’ represents an entry point for those that do not fit the typical client mould in the financial advice world. Over time, those clients may have more sophisticated advice needs and require the services of a professional financial adviser. It is up to financial advisers to clearly demonstrate their value proposition and showcase why independent financial advice is a hundred times more valuable than product-led advice. ‘Agents’ can also transition into professional adviser roles over time via the appropriate education pathways helping bridge the gap between demand and supply of advice.

Technology

The most noticeable legacy of Covid19 is the adoption of digital AdviceTech. The need for technology that can help financial advisers visually demonstrate the true value of advice was at its peak during the lockdowns. We have also seen the emergence of video conferencing tools like Zoom, digital signature software and an increased use of digital SOA solutions by financial advisers.

There is a strong sentiment in our industry that advice businesses with outdated technology will struggle to survive in an ultra-competitive advice landscape. Financial advisers are lucky to have an array of AdviceTech options to create greater client engagement and deliver advice the way today’s client interacts. We have seen significant efficiencies via technology often reflected in the reduction of manual, repetitive and time-consuming tasks such as data entry and fact finding. The relationship between AdviceTech and advisers is fusional. Each element supports the other to create an efficient, smart, and sustainable advice model designed around the client experience.

Gen Next will continue to develop the adviser of the future, through forward thinking and bravery, we harness the power of education and technological innovation to create meaningful change. Join me in a tech-driven community of advice professionals to create a sustainable new world of advice.