Robo-advice as conflicted as vertical integration: AIOFP
Attempts to introduce robo-advice into the Australian market have overlooked the fact that has not worked anywhere else in the world, according to the Association of Independently Owned Financial Professionals (AIOFP).
Peter Johnston, AIOFP executive director, said the introduction of robo-advice compared to the vertical integration model introduced by the banks.
“The greatest industry conflict over the past 30 years has been when the banks introduced the profoundly conflicted vertical integration advice model, this is a very similar concept without the human content,” Johnston said.
“It just another ‘sneaky’ strategy to only offer an in-house product to already existing clients regardless of their quality.
“It is about time academics and bureaucrats, who live in a different world to most and never given advice or seen a consumer are removed from the industry debate.”
Johnston said politicians, the Australian Securities and Investments Commissions, and consumer groups failed to recognise the advice community did not want “bad eggs” in the industry.
“This failure has resulted in inexperienced humans making naive decisions resulting in massive red tape strangulation, duplication and ridiculous uncommercial conditions that ironically consumers are indirectly paying for,” Johnston said.
“There is a minor place for robo-advice going forward in conjunction with human advisers to assist when things go wrong with markets and/or products.
“The last thing we want are a bunch of academics trying to develop a conflicted product to ‘clip’ the ticket on industry revenue.”
AUTHOR
Chris Dastoor
Recommended for you
A strong demand for core fixed income solutions has seen the Betashares Australian Composite Bond ETF surpass $1 billion in funds under management, driven by both advisers and investors.
As the end of the year approaches, two listed advice licensees have seen significant year-on-year improvement in their share price with only one firm reporting a loss since the start of 2025.
Having departed Magellan after more than 18 years, its former head of investment Gerald Stack has been appointed as chief executive of MFF Group.
With scalability becoming increasingly important for advice firms, a specialist consultant says organisational structure and strategic planning can be the biggest hurdles for those chasing growth.
