Stockspot has taken a contrary view to its digital advice peers in believing the Quality of Advice Review will negatively impact consumers through poorer quality advice.
Stockspot chief executive, Chris Brycki, told Money Management that the digital advice firm had been asked to participate in a roundtable of digital advice providers by Michelle Levy but his views differed from his peers.
While he believed the proposed changes would benefit digital advice businesses, he felt they would have a worse effect on consumers.
“Digital advice firms want to lower the barriers so they can sell to superannuation funds, the quantity will improve but I think the quality will go down.
“It is a good thing to have a high bar, it’s gone too far in the other direction and I think it would be worse for consumers and could harm them.”
It could also lead to a return of advice from banks and other big financial institutions.
In its submission to Treasury, Stockspot said: “Separating the provision of advice from the product is critical to ensuring the best interests of the consumers continue to be met. A move to weaken regulation in this area would threaten fiduciary financial advice and would see a return to the advice market of the big financial institutions employing a product-led distribution strategy.
“The term ‘good advice’ needs to be properly defined. It should not be open to multiple interpretations which could lead to poor consumer outcomes. The volume of advice will increase and at the same time the quality of that advice provided to consumers will deteriorate. Consumers will be recommended inferior in-house products or products that generate a higher revenue for the adviser or institution.
“The quality of financial advice will deteriorate and once again allow bad actors to re-enter the advice market. Financial incentives, including commission-like bonuses masked as performance bonuses to providers of advice, may lead to increased conflicts of interest.”
Looking specifically at requirements for digital advice providers, it said: “Stockspot firmly believes that digital advice providers should have fiduciary like duties their clients. Any conflicts of interest and third-party arrangements must be disclosed to the consumer. Digital advice providers must also disclose whether and to what extent any remuneration received by the digital provider and/or its employees and contractors is dependent on sales to clients.”
Regarding the removal of a Statement of Advice, it said: “A statement of advice traditionally details every aspect of the advice provided. If it is removed altogether, consumers might not even know that such a statement once existed or is available. Whilst simplifying advice- rather than abolishing it- negatively impacts on Stockspot’s business we believe that is a much better outcome for consumers.”
I am just grateful that Adele ferguson and 60 minutes, the age and SMH are now targeting the bad doctors and not financial planners.
God bless you Adele get ‘‘em and pls give us a break for a while ( long long while )
I wonder what happened to the whistleblower Jeff Smith and what became of Don Nguyen.
How could the quality of digital advice drop any further? it’s literally a series of questions to place you into a risk profile which then dictates which one of their 5 portfolios you’ll get. I still believe a business like Stockspot should be licensed as a fund manager not an advice business. It’s insulting to Financial Advisers to call this advice.
Isn’t stockspot a provider of ETF investments? what other robo or any other advice does it provide someone using it other than to use its product? Is this ‘good’ advice?
Hard to disagree with anything you said Chris.
Unfortunately your sage advice will be ignored.
The railway tracks of insto product advice once again creating havoc was the outcome of this review before it started.
From the great wisdom of Sir Humphrey Appleby (Yes Minister):
Minister, two basic rules of government: Never look into anything you don’t have to. And never set up an enquiry unless you know in advance what its findings will be.