ASIC research confirms the need for change, says Australian robo advisor

From

Pat Garrett

Leading Australian online investment provider, Six Park, says ASIC’s latest report (Financial Advice: What Consumers Really Think) confirms the need for industry change and showcases the great opportunities that lay ahead.

Six Park co-CEO Pat Garrett said the research supported what was already anecdotally known throughout the industry – high fees and low trust are major issues for advisers to combat, and technology can help when it comes to designing a new model for the future.

“It’s clear that many consumers want financial advice, particularly about investment in shares and managed funds, but the cost of this advice and finding an adviser they trust is a huge barrier,” said Mr Garrett.

“This is what we’ve been hearing from clients for some time and why alternative services like robo-advice are experiencing significant growth, especially after the Banking Royal Commission brought all of these issues to the surface.

“When looking at barriers to advice, we can also see that many Australians either think that their financial circumstances are too small to warrant financial advice or like to manage their finances themselves, suggesting there is definitely a middle ground of advice that’s not being catered for effectively in this country.

“If someone with $10,000 or $20,000 to invest is only given two options – a personalised investment strategy costing around $3,000 for a statement of advice or the other extreme of having to make all the investment choices for themselves – then it’s not surprising that so few people are seeking the advice they want and need.

“What’s positive is that technology is helping bridge that gap. The wealth management industry is poised for huge changes in the next few years, and we see this as an exciting and transformative opportunity.”

Mr Garrett said the report also reinforced the need for more financial education for consumers and the necessary move towards simpler solutions.

“The report shows that one of the huge roadblocks for some Australians when it comes to their finances is ‘getting around to it’ – reflecting both our busy lifestyles but also our mind’s tendency to delay these sorts of decisions.

“Lack of interest, feeling that it’s too hard, perceived risk, perceived lack of relevance and not wanting to change lifestyle are all reasons Australians are giving for not seeking financial advice – so as an industry, it’s up to us to make solutions that are simple, relevant, tiered to different consumers, easy to implement and transparent.”

Mr Garrett also noted it was promising that Australians were open to digital advice – of participants who had recently thought about getting financial advice but had not gone ahead, 37% were open to using digital advice.

“It takes time for an industry to change but it’s promising that a high number of Aussies are open-minded regarding the ways financial advice can be delivered.

“In the US, we’re already seeing online investment providers and financial advisers working side by side very effectively. This new direction was very much driven by consumer demand in the wake of the GFC.

“Robo-advice can stand independently for consumers with straightforward investment needs; equally, it can be very complementary to face-to-face human advice when that is needed. What we need to focus on, as an industry, is creating service models for the future that meet clients’ needs at every stage of their lives.”

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