Despite evidence showing increasing consumer demand for Internet and phone-based simple financial advice outside of super, the industry seems to be moving at a snail’s pace towards making such services available to clients.
According to AdviceConnect chief executive officer Mike Giles, cost and compliance issues, as well as the time it takes to train advisers to give limited advice, may also prove to be obstacles.
AdviceConnect, formerly known as WealthPoint, launched a phone and web-based advice platform in 2008 and has since offered its services to major institutions.
“We’ve seen some really great uptake from the business, but they’re still slow to deploy it and it’s been a slow two years since we’ve launched the application,” Giles said.
Giles noted that unlike super funds, retail institutions which own their own full-service face-to-face financial advice channels have been hesitant in the introduction of phone and internet-based advice due to potential conflict of interests.
“They’re waking up to the fact that we’re talking about a totally different segment of the market and that there is a huge opportunity to tap it, but they’re all looking to each other to see who is going to move first,” he said.
The Australian Securities and Investments Commission’s (ASIC’s) research paper, ‘Access to financial advice in Australia’, found licensees generally seem to be concerned about the extent of their liability in the event that a client receives scaled advice when comprehensive advice might have been more appropriate.
The regulator recommended that practices explore the option of providing scaled advice and urged licensees to contact ASIC for regulatory comfort.
However, Colonial First State Advice business general manager Paul Barrett said there were regulatory hurdles and uncertainties about simple advice that might keep licensees from delivering such advice.
“You’ve got to make sure the regulatory environment enables this advice to be provided with clarity, and as you know at the moment there is a bit of an unlevel playing field in that certain sectors of the market can provide intra-fund advice and others can’t,” Barrett said.
Colonial First State launched a phone-based advice service last year and subsequently expanded it across its advice services.
Both Barrett and Giles believe simple advice offered via phone and the Internet is the direction in which the financial advice industry is heading.
“From our point of view, there are only three channels to market: face-to-face, phone and web,” Giles said. “And over the next three to five years everyone will have to offer all three channels.”
