AMP provides roadmap to ‘move the needle’ on digital advice
As industry bodies push for quicker implementation of the Quality of Advice Review (QAR), AMP has revealed how digital advice providers can lead the way forward.
In a recent interview with the Financial Services Council (FSC), Minister for Financial Services, Stephen Jones, expected a final position on the QAR by late May or early June.
As the Minister’s forecast nears, AMP released its digital financial advice report which surveyed 16 technology solution providers.
“The QAR reaffirms that additional regulation is neither required — because the Corporations Act already contemplates digital advice and does not treat it differently from other financial advice — nor desirable by stakeholders to facilitate digital advice,” the report stated.
Thus, it was proposed that digital providers and initiatives would be at the forefront of enacting the QAR’s recommendations.
“The mass adoption of cloud has meant that providers are offering a Software as a Service (SaaS) solution. These can be deployed live in a matter of days, at the most in a couple of weeks for those willing to adopt out-of-the-box solutions,” AMP added.
Jason Nyilas, head of retirement and digital innovation at abrdn, echoed the eager sentiment.
“If the QAR proposals went ahead in the current form, abrdn would be ready and able to operate in Australia within weeks,” he said.
The report identified specific steps for digital providers, advocacy groups and advice firms to “move the needle”.
Digital advice providers
The underlying challenge for tech solutions was to bolster clients’ confidence in digital options, including its sustainable nature and abilities to mitigate risks.
AMP made the following recommendations:
- Educate stakeholders on the consequences of not providing advice to clients, alongside its benefits when offered;
- Contribute to risk management frameworks and compliance standards for customers;
- Provide further clarity on liabilities and attribution in the case of error, particularly when two separate AFSLs were involved; and
- Improve services such as clarity on digital value proposition, reporting dashboards tracking customer uptake and clearer distinctions between “out-of-the-box” and customised solutions.
Advocacy groups
“For the financial services industry and consumer advocacy groups, the challenge is that while the industry publicly commits to the need for more financial advice, driving the change needed is much harder,” the report said.
Success would involve:
- Cooperating with other consumer advocates to find areas in common;
- Collaborating on agreed issues to enact regulatory change and sand-boxing;
- Providing capital to invest and strengthen fintech development; and
- Promoting different innovation models to address issues in multiple ways.
Advice firms
Obstacles to advice practices included avoiding a two-tiered advice system which would disadvantage comprehensive advice while finding a way to provide more affordable advice.
AMP’s suggestions were to:
- Work alongside digital advice providers to create a seamless service across all parts of the advice value chain;
- Confirm all referrals were handled well; and
- Focus on comprehensive advice whilst decreasing costs through greater digitisation.
AUTHOR
Jasmine Siljic
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