Robo-advice is the future of financial advice and that should not cause concern for advisers but make them excited, according to the Minister for Superannuation, Financial Services and the Digital Economy, Senator Jane Hume.
Speaking at the Association of Financial Advisers (AFA) conference on Tuesday, Hume said robo-advice and digitally augmented advice were going to make financial advice more accessible and affordable.
“Digital advice will not replace advisers, it will augment them and enhance their capabilities. Advisers will be able to better serve more clients at lower costs, helping make advice more affordable and accessible than ever,” she said.
Hume noted while no product provider had “cracked the nut” of a full service robo-advice, when the issue was “cracked” it would create a “fantastic product” but would not replace the 18,000 or so advisers practicing in the country.
“What robo-advice and other digital tools will do is offer an alternative for people who don’t currently have access to an adviser, or who wouldn’t pay for an adviser. It will get young people more engaged with their finances. And it may act as a gateway to full service financial advice,” Hume said.
“As a mother of three young adults I can tell you that many young people would prefer to first engage with an app than a human. But as their financial circumstances become more complex, as this generation of young people become more affluent, have more assets, they will then seek out more complete services – an adviser who can provide the additional value-add, and tailored understanding of their personal situation.
“Robo-advice should not cause concern, it should make you excited at the opportunity you have to create a fantastic pipeline of clients for full service advice. That is the future of financial advice.”
Hume pointed to the Consumer Data Right (CDR) and said this would allow data-driven innovation to help create new products, services and jobs.
“The Government is considering changes to the CDR, designed to reduce barriers to participation and enable consumers to better leverage their data in banking. This includes giving consumers more choice about who they share their data with, such as their financial adviser, mortgage broker, accountant or tax agent,” she said.
“If advisers could – with the consent of the client – have access to a new client’s financial history, imagine how much more efficient your practices could be in serving your clients, and with that, deliver advice at lower costs to consumers.”