Robo-advice needs genuine interaction: Midwinter
Robo-advice offerings today do not offer any genuine interaction and more work is needed to help create a seamless interface with clients, Midwinter managing director, Julian Plummer, says.
As Midwinter gears up to launch its digital advice framework next month, Plummer said that automated investment tools represented an opportunity for greater innovation in financial planning.
“The confidence in robo-advice is still developing. All robo-advice [today] is scaled advice. It is objectives-based, because it only has one risk profile and it is self-servicing,” Plummer said.
A key feature of Midwinter's new digital advice framework is that all the data that its cloud-based AdviceOS platform has on a user will be transported across into their digital advice account.
This will allow users to have greater insights into individual spending habits and behaviours in real-time as well as being able to seamlessly escalate from self-service all the way up to face-to-face advice, he said.
"We are introducing this concept of stochastic returns into [our] projections to allow the users the probability of advice and the probability of getting their goals…what you want to do with this digital advice framework is get every combination of advice available," Plummer said.
"It's more of a cohesive approach than just robo-advice. What we want to do is make financial planners be [at] the centre of their clients' financial universe and this is the tool they can do it with," he said.
According to Plummer, another key feature of the framework is its ability to produce a statement of advice (SOA) in real-time.
"Digital SOAs are going to be the lingua franca, the language with which we speak to our customers. We want to be the default choice for financial planning software in Australia," he said.
"What we want to do is make it as engaging as possible but at the same time still have all the [features] that a typical SOA has, such as advice fees, service fees and investment fees."
A key focus for Midwinter's roadmap for the digital advice framework is now the integration of self-managed superannuation funds via third parties using application programming interfaces (APIs).
Plummer confirmed Midwinter will begin pilot programs for the digital advice framework in the first week of April.
Recommended for you
Sharing his reasoning in joining the FSC board, WT Financial chief executive, Keith Cullen, believes “product and advice cannot be separated” from each other in the current environment.
The Emerge Foundation, a charity run by financial advisers and fund managers, has announced a scholarship program to help veterans transition into tertiary education.
In an open letter, Sequoia chief executive Garry Crole has hit out against shareholders “with a personal axe to grind” as he fights for his job ahead of an EGM.
The JAWG has announced it is in talks with Treasury around five “core principles” to strengthen the education standards for new entrants to the financial advice space.
