Why digital is key to dealer groups' adviser proposition

23 February 2023
| By Industry |
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Advisers want to spend more time doing what they do best which is providing great financial advice,
while running a profitable business.

Surveys highlight adviser profitability is challenged, driven in part by compliance as well as poor technology and systems. The result is higher adviser operational costs and revenue constrained to the number of clients an adviser can compliantly serve.

With the Quality of Advice Review (QOA) final report handed down on 8 February, the industry is poised for change. While some advisers are embracing the findings and their potential to reduce the compliance burden and cost to provide advice, others are sceptical they will provide positive change for the financial advice profession.

In either case, there remains a level of uncertainty, with the details and timing of any legislative changes yet to be determined, and the Minister for Financial Services, Stephen Jones, indicating he plans to ‘stress-test’ the review’s recommendations before taking them to Federal Cabinet.

Use by super funds

However, the report is clear in its view that personal advice is not the sole domain of financial advisers, and this transition has already commenced. There are at least 12 superannuation funds in Australia offering personal advice services to their members, underpinned by Midwinter’s digital advice technology.

These funds are offering predominately scaled (intra-fund) advice via digitally enabled services augmented by professional advisers, providing millions of members that may not otherwise seek traditional face to face advice with a means to get financial help.

These organisations are investing significantly in digital advice technology to enable a consistent, compliant, and scalable solution that provides members with flexibility in how they access advice.

This digital approach is integrated with other technologies that are core to the end-to-end advice process. For example, member portals at the experience layer can support self-service and engagement, and registry systems at the administration layer enable straight-through-processing of advice.

Rather than stand by as super funds leverage digital technology to provide efficient, engaging, and scalable advice offerings, now is the time for dealer groups to look at how they can adopt similar technologies as part of their proposition to advisers.

The same digital advice technology that super funds use to enable intra-fund advice services, can be used by professional advisers to reduce the time, cost and risk associated with serving their high-net-worth clients.

Using tech to reach consumers

This technology can also help advisers extend their reach and relevance to a broader set of Australians that currently do not access face-to-face advice, unlocking additional value and growth opportunity. 

The last few years has seen consumers increasingly embrace online services for everything from grocery shopping to telehealth, legal services and banking. Expectations for digital services that enable more convenient, simple, and secure interactions will ultimately require professional advisers to adopt digital technology to stay relevant.

The QOA final report highlights digital advice tools as an important enabler in the delivery of personal advice services for both relevant and non-relevant providers.

However, this technology is unlikely to replace the human adviser. Robo-advice, which failed to thrive in Australia and the UK, is stalling in the United States according to JPMorgan head of digital and client solutions Dr. Kelli Keough.

It is being replaced by a ‘hybrid’ model that combines the empathy and trust built through a relationship with a human adviser, and the efficiency and convenience of engaging digitally. This hybrid service model is poised to become the future for progressive advisers that want to keep pace with client expectations.

During the last reporting period, dealer groups highlighted a need to develop innovative technology to enhance the efficient delivery of cost-effective services as well as improve their client experience and digital capabilities.

For an industry heavily reliant on human processing and intervention, fully leveraging the efficiency enabled through digital advice requires a shift in mindset: one where participants are comfortable to automate easily repeatable processes and provide more customer self-service.

Advice businesses have already started down this path, adopting digital technologies such as client portals where their customers can securely view performance reports, update personal information, and access financial documentation.

But these services are just the tip of the digital advice iceberg.

Uses for technology 

A shift towards radical efficiency requires the use of technology to automate manual tasks across the preparation, implementation, and administration of advice, as well as the optimisation of business processes for data collection, implementation, advice formulation, and documentation.

Reducing the time spent on mundane tasks and tedious background work will enable advisers to put their focus where they provide real value to their customers – educating and guiding them through their financial journey – with the help of visually engaging digital experiences.

In an age where concerns around data security and protection of sensitive information are on the rise, a smarter approach to protecting customers while handling sensitive data and producing advice is critical.

For example, transmitting confidential information by paper or email opens multiple opportunities for a data breach through email transmission, lost documentation or just human error; establishing a secure and integrated online solution with digital fact find and client portal for collecting and sharing client data eliminates a lot of the need for this insecure data transmission and handling. For many advisers this may be the first step to offering a hybrid digital – human service.

Conclusion

For dealer groups that aim to be here long-term, adopting a digital technology ecosystem of services that connect the client to their advice and money is not a question of if, but when.

As an industry, we know that financial advice has a long way to go to offer the seamless digital experiences people consume in their everyday lives. Professional advisers who value practice management support from their licensee will turn to those groups that offer access to integrated technology that reduces their time and cost serve. The by-product is compliance by design that supports the licensee operations and keeps everyone ahead of the curve.

Avoiding change is not the answer. Dealer groups can use their scale to help advisers evolve their offering to include engaging and accessible digital advice experiences, supported by a deliberate technology architecture that considers the adviser total cost of ownership.

As soon as a hybrid advice model becomes the norm – and a piece of advice can be developed in a matter of hours rather than days or weeks – advice businesses that have not adopted these digital technologies will become uncompetitive.

Dealer groups that are already planning, or better yet progressing their digital advice strategy will be
the ones that charge ahead of the rest.

Steve Davison is chief commercial officer at Midwinter. 

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