Advice delivery outdated

advice/Schroders/Sam-Hallinan/

3 December 2021
| By Chris Dastoor |
image
image image
expand image

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.

“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.”

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

5 months ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

5 months 1 week ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

7 months 1 week ago

The FSCP has issued a written direction to an adviser who charged clients “extraordinary fees” for inappropriate and conflicted advice, as well as encouraged them to swit...

1 week 6 days ago

ASIC has cancelled the AFSL of an advice firm associated with Shield and First Guardian collapses, and permanently banned its responsible manager. ...

3 weeks 2 days ago

ASIC has confirmed the industry funding levy for the 2024–25 financial year, and how much licensees can expect to pay....

3 days 21 hours ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
2
DomaCom DFS Mortgage
95.46 3 y p.a(%)
5