Expect digital advice to prompt return of banks

BetaShares banks siaa Stephen Jones

15 May 2024
| By Laura Dew |
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Betashares chief executive, Alex Vynokur, believes technology advancements will enable banks to return to financial advice in the future.

Speaking at the Stockbrokers and Investment Advisers Association (SIAA) annual conference in Melbourne, Vynokur discussed the services that will be provided by wealth management firms in the future. 

Under the Quality of Advice Review, Minister for Financial Services, Stephen Jones, has proposed banks and superannuation funds being able to provide advice to consumers or members as way to increase the supply of advice to consumers. However, the idea has seen a mixed response from the industry. 

Vynokur said advancements in technology could help banks re-enter this space despite them previously coming under scrutiny during the Hayne royal commission for their advice activity. 

“In last 14 years, banks have moved out of the wealth segment either by choice or through regulatory intervention. At the same time the needs of Australians have not gone away and are becoming more acute. 

“Banks will, in my view, no doubt be back in the game but in a different way. Millions of Australians turn to banks for their daily needs in terms of credit cards and mortgages. I do not believe they will come back with human advice, but I do see a day when they will use a digital service to help customers be smarter with their money.”

However, technology will also offer equivalent options to help financial advisers with their clients as well. 

“Technology will play a much more significant role in the advice industry, not only in how humans deliver advice but enabling advisers to augment their client base and provide a high-touch service for those who can afford to pay for it. But at the same time, it will allow them to look after clients who may not be able to pay for it. 

“There is no question in Australia that technology will be helping advisers more and more to deliver cost-effective advice to Australians. 

“Personal, human advice is not going to go away and the need for human advice is greater than ever as the flow of information we are receiving will require trusted relationships.”

Betashares, which Vynokur launched 14 years ago, recently released its own self-directed investment platform Betashares Direct. This allow consumers to invest in ETFs traded on the ASX with zero brokerage and no account fees on ETF holdings.

Discussing the thinking behind this launch, Vynokur said firms will need to think carefully about their future business moves as what has worked for them in the past may no longer automatically work again. 

“The opportunity in the market has evolved significantly and the opportunity for our business is as good as I’ve ever seen it. You need to have a game plan, but at the same time you need to pay attention to what moves your opponent is making. 

“Everything in life is changing; the industry is changing and the needs of investors are changing. The opportunity is better than it’s ever been. The need for human advice is as high as it’s ever been. [Advisers] have lived through constant regulatory change and higher compliance burden, but now is the time to focus on the future.” 

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