Advice delivery outdated

Direct investors are missing out on valuable advice because the industry is antiquated in how it functions and are an “accident potentially waiting to happen”, according to a panel.

Speaking at the Calastone Connect Forum, Tim McGowen, Informed Investor managing director, said the typical director investor was associated to the younger demographic that invested in the under-researched, inefficient end of the market.

“I’m a firm believer in financial advice and I think one of the accidents potentially waiting to happen is with that sort of investor,” McGowen said.

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“That sort of investor is the barista down the road who has his stocks on a watch list. How does the industry attract that sort of investor into the advice industry into products that are managed on his or her behalf? That’s one of the challenges moving forward.”

McGowen said that advice could only come through technology as that how direct investors were currently serviced when it came to information.

“There’s an army of investors who follow different trends on social media platforms, they can trade a stock very cheaply but the real issue is how will the industry service that investor moving forward because there is an army of them that are used to technology,” McGowen said.

“If you look at the advice industry in particular, it’s quite antiquated in terms of how it services it customers.

“It’s factsheets, its PDS [product disclosure statements], there’s an SOA [statement of advice] that takes 10 hours to produce.

“There’s a real challenge for the advice industry which already has its challenges to how it services that direct investor.”

Sam Hallinan, Schroders Australia chief executive, said the asset management industry could learn from how the travel industry evolved in terms of how to serve a broader and ever-changing demographic base.

“Thirty years ago, if you were a traveller and you wanted to experience Sydney, you go and see a travel agent and that travel agent would book you into the Four Seasons and you go to the hotel and then you’d go back home,” he said.

“Twenty years ago, people said ‘I want something a little bit different’ so you started to see the advent of boutique hotels emerge on the fringe of the city like Surry Hills and Paddington.

“Then 10 years ago people said ‘I actually want to immerse myself in what it is to live in Sydney’ and off the back of that we saw the creation of AirBnB.

“You’d then go to a converted warehouse in Newtown and sitting in the fridge is a six-pack of Newtowner Pale Ale and then in the afternoon you’d go see how the pale ale was made.”

Hallinan said that was what people expected and the industry was not giving them a comparable experience.

“From a manufacturing perspective, the only way you can provide that type of experience to the end investor is through technology,” Hallinan said.

“At the moment, to rely on the mechanisms that we’ve given people to access mutual funds and managed funds, it’s just not going to cut it.”

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Do these people understand the compliance regime of financial advice. Yes I'll give advice without a PDS and an SoA and be banned or jailed in snip!

And technology must be the answer instead of those pesky personal advisers right? Surely an app provided by a product provider will be completely free of conflict and the clients will get a great outcome of someone (thing) that cares, like a big corporate.

Spare me please, what a load of BS.

I generally have a look at the background of the people quoted in articles such as this (professional experience, any qualifications whatsoever after high school and if ever licensed - from ASIC records).
That way, I can decide for myself if the opinions they gave on matters of financial advice or the "industry" are worthwhile considering.
I'm often disappointed.

very good filter. before i read these articles, i google their profile and then decide whether or not to.

there are lots of these peddling merchants on here

you describe investment advice rather than financial planning.

What a terrible analogy from Schroders. The best travel outcomes come from interesting options. The best investment outcomes come from boring options. Trying to make investment as interesting as travel, or video streaming, or social media, or online gambling, or crypto speculation, is irresponsible and ultimately counterproductive.

Clients who crave the same excitement from investments that can be experienced from online gambling or crypto speculation should be encouraged to participate directly in those things, with a small amount of money they are prepared to lose and write off as an entertainment expense. But their investments should be safer and boring.

I’d rather not attract a barista trying to day trade in to my book, thanks. I love how often people are flogging fintech as the saviour to our industry. Sure, it might help some people. In much the way that some choose to book holidays online themselves and spend hours doing it. Others prefer to sit down with someone and have it taken care of. That’s why we exist.

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