ASIC confirms advisers don’t back digital advice

Financial advisers have sent the Australian Securities and Investments Commission (ASIC) an unequivocal message that they are unlikely to be providing digital advice services in the future in the context of the regulator’s affordable advice review. 

ASIC has told a key Parliamentary Committee that 134 out of 183 respondents to its consultation paper dealing with affordable advice had stated that they did not want to provide digital advice in the future, believing it is best suited to simple advice. 

ASIC said the key issues identified by the respondents were the development costs associated with digital advice, a lack of demand and “consumer preference for a human adviser.” 

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“However, advisers saw a role for digital advice support services (e.g. better document management systems, fact finding, online client interactions and reporting tools),” ASIC told the Parliamentary Joint Committee on Corporations and Financial Services. 

“Most considered that digital advice is only suited to simple advice needs and younger people. Respondents also noted that existing technologies often ‘promise a lot’” but in practice do not integrate data well (assessing the interaction between income, tax and Centrelink entitlements for example), and do not allow for adequately tailored advice and strategies,” ASIC said. 

The regulator detailed the limitations respondents outlined to the delivery of financial advice as being: 

a. Digital advice only commercially feasible ‘at scale’. The cost and scale to provide quality digital advice make it profitable only for larger entities, with the resources and systems in place; 

b. Digital advice is only useful for ‘single issue’ advice. Respondents were of the view that human advisers are required for complex advice needs. Many respondents also considered that digital advice is not conducive to building long term relationships with clients; and 

c. Some respondents raised a quality concern with digital advice and that clients can receive poor advice if input information is provided incorrectly. Algorithms are not advanced enough to address the interaction of multiple advice needs and takes a limited view of a client’s solution. 

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The cost of developing a digital advice solution that can provide impartial advice customised to each client's unique circumstances is massive. It would require enormous amounts of capital, and end up costing consumers more in advice fees than interpersonal advice does.

However developing something which provides a limited scope, standardised solution to promote a particular product is more economical to do, when the developer can recoup their costs via the product revenue it generates.

That's why there is no such thing as "robo advice" or "digital advice" at the moment and it's unlikely there will be for a long while. All current solutions promoting themselves as such are electronic product sales tools, not advice.

Why are ASIC allowed to cherry pick the data? All submissions should be released to the public. Or maybe ASIC doesn't want the public to know the truth?

MIA Jane Hume, ASIC, anyone please show us a Robo Advice system that will provide compliant Advice in the BS over the top REGS world. Doesn’t exist hey !!!
Doesn’t exist or work in countries with far less BS REGS, let alone here.
Keep promoting the Mythical Robo Advice saviour world. It gives you an excuse to not address the real issues of massive over regulation.
Pathetic, moronic bureaucrats hoping for a silver bullet.
It’s ASIC and Canberra that need the bullet!!!

Who would want to provide a digital advice solution when you’re on the hook for the outcome for 10 years?! Where is the ROI on that risk?

The only ones who'd want to do it are product floggers who have regulatory immunity... union funds.

Nearly all the Australian "roboadvice" startups have been wound up after getting a token trickle of clients, with their technology sold to union funds to repurpose as an inhouse service. It has become a standard fintech business strategy.

Does anyone with any “clout” politician or otherwise actually take the time to not only read but “ absorb “ the feedback we give?
It is obvious to everyone that what is happening now and has been now for several years is detrimental to all in the profession and more so to the prospective client
There is no client best interest in all this rubbish just what has been a long term ploy to irraticate the retail adviser.
You do not have to have a university degree to be “ human” to understand and work out people’s needs
Yes ! There are times where basics just don’t cut it but we all know when to move on and referr our client when we have done all we can if the need is there
This legislation regardless off what we are told has hidden agendas that do not include risk advisers and to a great extent financial advisers who may have has 40 years in the industry but because their qualifications are more than 15 years old apparently ?? Have no idea and need to go back to school ?
There are far more people in areas if so called regulation that need to start again ( at Kindergarten) to be able to say they understand this business
Maybe just maybe someone will not only read these comments but actually act on them and ask “ US” the advisers how it works and what should we do to help get this back on track ?? Sometimes we just live in hope

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