Midwinter warns of risk of avoiding digital advice
It is a case of ‘when, not if’ as to when super funds adopt digital advice, according to Midwinter.
Last month, Money Management wrote how Michelle Levy believes financial advice could be given to super fund members digitally rather than by a person with a degree in financial planning.
“In some cases, the nature of the advice may mean the advice should be given by a financial adviser. But in other cases, the nature of the advice may mean it can be given by a person who is trained to follow a script. Increasingly, advice might be given by a digital advice tool and not by a person,” she said in an op-ed for The Australian.
Responding, Steve Davison, chief commercial officer at Midwinter, told Super Review: “The technology to implement a scalable digital advice offering exists and is used by some of Australia’s leading superannuation funds to offer member-directed advice through either fully self-service or human supported experiences.
Some 12 super funds are already using Midwinter technology either directly or indirectly, he said, representing 3.4 million members.
While the Quality of Advice Review, which the government is encouraging super funds to give retirement income advice, is yet to be passed, Davison said the trend of travel was towards advice regardless.
This is particularly the case as super funds have a high level of trust and brand reputation from their members. They also rank higher than advisers in whom a consumer would seek financial advice from.
He said: “Many [funds] are still assessing the value of providing advice to members relative to the risks and costs inherent in offering it. However, we would challenge there is also a risk in avoiding advice and not meeting member needs, in particular as they approach retirement.
“The question for the sector is do they want to wait for regulation to land or do they get in on the front foot and do it today? The technology is already there to do it today so why wait?
“At some point – we expect soon – the industry is going to reach a tipping point where the risk of avoidance outweighs the risk of adoption.”
As to how Australia compared to the rest of the world, he said the Australian system is ‘world leading’.
“Advice in the UK is a lot simpler than how we think about intra-fund advice over here and where it is heading, it is world leading and something we should be proud of. In other markets, it’s very narrow where they only focus on the investment portfolio and the asset allocation,” Davison said.
“Intra-fund advice takes that into account and also your insurance and your pension so it’s broader.”