Financial advisers make up only a “micro, tiny part” of the Quality of Advice Review as the slow volume of new entrants means reviewer Michelle Levy sees digital advice playing a greater role.
The review published its final report in February 2023 but was yet to receive a government response from Minister for Financial Services, Stephen Jones.
The role of digital advice had been referenced in the report as a way to provide advice more effectively and efficiently and, since the report, financial institutions and superannuation funds had latched onto that idea as a way to return to providing financial advice.
Speaking to Money Management, Levy said: “There will be more advice given digitally. Unless we change the law, we will continue to lose advisers.
“The conversation about whether you have relevant providers or non-relevant ones, those people who are not qualified financial advisers, is almost redundant because there will be none left. And so, what will happen is institutions will have to look at alternatives and they are already doing that, they are already looking at digital advice.
“I don’t mean [advisers] will disappear but there’s not a lot of new people coming in, so there will be less and less people, and more and more will be done digitally.
“More advice will be given digitally but, I need to make this very clear, comprehensive financial advice is only a micro, tiny part of the broad ecosystem of what is financial advice.”
This forecast of a small number of advisers meant her QAR report had to be written from the perspective of digital advice playing a greater role in the future, Levy stated.
In a speech at the 2023 Stockbrokers and Investment Advisers Association (SIAA) conference in Sydney, she told delegates: “There’s a very profound misunderstanding, no matter how many times I say it, that when you talk about financial advice, it’s such a broad spectrum of things that are being touched on.
“A lot of the concern and criticism coming from consumer groups around best [interests] duty assumes all advice is given by, as my children would say, an olden days, 20th-century model of a financial adviser in an office talking about a comprehensive financial plan.
“That’s part of it, and best interest duty will continue to apply to those people, but that’s only a tiny part of what this is all about.”
Levy also touched on statements of advice (SOAs) and said the industry should decide how they want to record their advice.
“People are overstating the value that AFCA and ASIC see in lengthy statements of advice. ASIC has been pleading with the industry for a long time to make statements of advice much shorter and clearer, AFCA have told me in consultation that they are suspicious of the accuracy of SOAs,” Levy said.
“So I’m not convinced either of them want [lengthy] documents. They just want some accurate evidence of advice and recommendations given, it’s not all the stuff that goes with it. How you record that is something that should be left up to the industry.”
In one fell swoop, the banks and AMP are getting what they tried to get under the Royal Commission – to get rid of those pesky advisers with real relationships who hold clients trust, and replace them with computer algorithms. After all, why wouldn’t we trust AMP or the big banks? What could possibly go wrong with that model?
FYI of course we are all moving to use technology to make our processes more efficient. That’s not digital ‘advice’!
And bugger me, are you implying Michelle that we WANT the voluminous SOAs to continue? Its us planners that have been complaining for years about the volume of disclosures that make the document unreadable to the average client – but we were told it was ASIC who were insisting on it. Could AMP and the big banks have lied to us again? Surely not.