Face-to-face advice needed but costs rising
The issue of costs, supply and demand of advisers, and digital versus face to face advice were the hot topics when it came to discussion of the future for financial planners at the Financial Services Council (FSC) Summit 2019.
Alex Wade, AMP Australian Wealth Management chief executive, said costs are going to continue to go up with all the disruption and changes in the industry.
“There’s always going to be a place for face-to-face advice, the challenge we had with face-to-face advice is becoming more expensive,” Wade said.
“There is a way that we need to look to support the different needs of different clients through different stages and a large part of that's going to be digital, phone and face-to-face.”
Dante De Gori, Financial Planners Association (FPA) chief executive, said we look at technology completely the wrong way.
“Technology and the digital adviser are trying to replace a function and trying to do it the same way,” De Gori said.
“What I think is really exciting in the technology space is how it actually can be embedded in the advice process.
“As long as we continue to see it as a service provided to consumers, then there's always going to be a role for a human person because of the critical thinking and the emotional connection.”
Despite the drastic changes to the industry, De Gori said the changes would turn the job into a genuine profession of financial planning.
“If you think about the hallmarks of a new profession it’s education and degrees standards, subject to a code of ethics, and ongoing continuing professional development (CPD),” he said.
“That for me is the framework that makes any profession compete, and these reforms then need to be backed by government and regulators.”
However, there would still be an issue of supply and demand – despite better qualified planners, they may be in short supply in the near-term with the impending exodus in the industry.
This may also be where digital advice could be expected to fill the gaps, along with face-to-face advice from human financial planners.
“We will be a profession of financial planners that won't be able to meet the demand of the Australian public,” De Gori said.
“Business models will be different and advice will be delivered differently, I don't know what that will look like exactly, but it won't be delivered as it is today.”
Nerida Cole, managing director – head of advice at Dixon Advisory, said the industry would evolve as planners find even more specialty areas and niches.
“I think there will be other specialties that will crop up that are advice, but are a little bit different to how we see advice at the moment,” Cole said.
“They could come from accountants and professionals like lawyers, as well as from the advice space.
“That could help us to actually serve the needs of the changing community, as we as we grow over the next few years.”
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