Speaking at the Stockbrokers and Investment Advisers Association (SIAA) conference in Sydney, Irene Guiamatsia, head of research at Investment Trends, said regulatory changes had led to an advice gap.
“If we define the advice gap, which is the disconnect we have between those who want to access advice and those who can afford it, is that different in Australia? I would suggest that yes, it is more acute in Australia than in other jurisdictions where we do research.
“In 2011, the wealth of advised Australians reflected the wealth across the population. If you looked at market segments of mass market, mass affluent and high net worth, 63% of advised people were in the mass market. Now we find it is a third [in each segment].
“This is a very, very acute problem in Australia.”
Even within high-net-worth individuals, those with $1 million available to invest, she said Investment Trends’ research had found 59% had unmet advice needs and needed help with portfolio construction and investment selection.
Discussing how it could be addressed, Balaji Gopal, head of Vanguard Australia Personal Investor, said Australia was behind the US and UK in the uptake of digital advice tools. In the US, he said, there was greater adoption and awareness of financial advice over the last five years while the UK was seeing people seek advice around retirement as the country lacked a mandated superannuation system.
“Australia, we feel, is slightly behind in advice adoption and digital advice adoption – predominantly we have robo-advice solutions. Pleasingly, ASIC [the Australian Securities and Investments Commission] is taking a view to try and look at scaled advice or fractional advice to make it accessible so hopefully things will change.”
However, the panellists said experiences in the US had indicated people still sought human engagement when it came to advice.
Guiamatsia said: “Our research in the US when you look at retail investors uptake of robo-advice solutions shows what investors really want is the ability to dial up or down the presence or engagement with a human. So for each of those market segments, there needs to be a human at the end of the process, it just varies by degree”.
This echoed findings by a previous Vanguard report earlier this year of 1,500 US investors which found human and digital advice played different roles with clients preferring the emotional support of human advisers but the tax optimisation and diversification offered by digital advice.
