Craig Keary

The only way to address Australia’s advice gap and meet the challenges raised by the Quality of Advice Review Issues Paper is through greater use of technology in financial advice, says Craig Keary, CEO APAC from Ignition.

“The Quality of Advice Review Issues Paper raises a number of ways to address the issues of the complexity and cost of financial advice.  These include both incremental changes to advice regulation, and the more substantial possibilities arising from technology.

“The key issue is that incremental measures, which might add 10 per cent to capacity or reduce costs by 10 per cent, will not be anywhere near enough to close the advice gap.

“Other cost initiatives, such as reducing the current regulatory load, are also worthwhile, but is clear that the cost reduction potential of such initiatives will also be incremental in nature: they will not improve accessibility or reduce the cost of advice by 50 per cent or more.

“To deliver that scale of improvement, you need disruptive changes to the supply of advice, which only technology-based initiatives can deliver, and at advice price points which are in-line with consumer expectations and/or the financial capacity of institutions,” he says.

In its submission to Quality of Advice Review Issues Paper, Ignition outlined a number of ways that digital advice, via technology, will play an integral role in the future of financial advice in Australia.

“In the first place, digital fundamentally changes the economics of advice delivery.  Current human advice modes are essentially variable cost models with limited opportunities for economies of scale,” Mr Keary says.

“For example, doubling advice capacity could only be achieved by adding additional resourcing to existing in-person or phone-based advice team, resulting in a substantial increase in costs.

“Digital advice solutions, however, reduce the average cost per piece of advice by changing the cost model from fully variable to a mix of variable and fixed costs. This allows many more customers to be served at the current level of expenditure, and for growth in capacity to occur without costs rising in the same proportion, thereby reducing the cost to serve for each piece of advice.

“Digital advice also allows large financial institutions to efficiently and economically serve new customers who would otherwise be unable to access advice,” he says.

Secondly, Ignition believes that digital advice solves many of the traditional barriers to advice for consumers:

• cost is significantly reduced
• accessibility is significantly increased
• control of the advice process is firmly in the hands of the consumer, who can access personal advice in their own way at a time that suits them.

“For example, members can log on and deal with their super when they have the time and mind space for it, whether that’s on a Saturday, late at night, or early in the morning,” says Mr Keary.

Crucially, digital advice already swims between regulator flags.

“The regulatory framework does not hinder the provision of digital advice and regulatory changes are not required to enable the adoption of digital advice by Australian institutions,” Mr Keary says.

“Digital advice is a new way to access single issue personal advice and is not a different form of advice in itself.  Institutions can be confident that digital advice swims between the flags, and meets all compliance requirements of traditional advice rules such as best interests duty, and appropriateness test.”

He added that digital advice does not result in any dilution of compliance standards.

“Rather, the automation of data gathering, checking and algorithmic development of recommendations, results in consistent and quality advice outcomes for consumers. Data collection is streamlined and automatically checked for outliers, errors, inconsistencies and conflicts. Nothing can slip through the cracks of digital collection.

“Our experience in the UK and Europe show that hybrid digital advice models are currently the dominant institutional preference. We expect to see the same trajectory in Australia, and the Quality of Advice review is a major opportunity to address the role that digital advice can play in the Australian market,” Mr Keary says.

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Eric Welsby

Ignition Advice, the global provider of advice technology, has appointed Eric Welsby as its new Chief Commercial Officer for Europe.

Eric has over 23 years of industry experience, and has held a number of leadership roles within retail financial services technology firms. Prior to joining Ignition, Eric was the global head of product and strategy for Bravura Solutions, a provider of software solutions for the wealth management, life insurance, and funds administration industries. Before that he held the role of deputy CEO at EQ Investors, a regulated wealth management, traditional advice and hybrid advice business.

As Ignition’s new CCO Europe, Eric will be responsible for the commercial strategy and development of the business through marketing, sales, product development and client service activities to drive business growth and market share.

Ignition launched in the UK in May 2021 and was appointed by wealth manager M&G Wealth to deliver the firm’s new digital advice offering for its advisers and customers.

Terry Donohoe, CEO Europe, Ignition, said:  “Eric’s appointment brings significant international experience and knowledge in sales, marketing and product to our leadership team as the business continues its growth trajectory to bring the benefits of hybrid advice to a wider market.”

Eric Welsby, CCO Europe, Ignition, added: “I am delighted to have the opportunity to lead the growth of an exceptional technology platform that enables financial institutions to engage with their large underserviced client base. Ignition’s ability to deliver highly configurable digital journeys including Protection, Pension and Investment products across Direct, Hybrid and full Advice channels will unlock significant efficiencies and drive better customer outcomes.”

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Craig Keary

While any crystal-ball gazing is risky, there are a number of trends that are set to play an increasingly significant role in the financial services industry in 2022 and beyond, says Craig Keary, CEO Asia Pacific at Ignition.

“After two years of pandemic and the associated lockdowns, many people are looking ahead at 2022 and wondering what to expect.

“There are signs that the year ahead will one of good opportunities and potential for both financial services institutions and financial planners.

“Many of these tailwinds have arisen directly from the COVID-19 pandemic and will shape the industry for many years to come.”

Accelerating digital adoption

Mr Keary says that one of the biggest trends in 2022 will be the accelerating adoption of technology in financial services.

“The COVID-19 pandemic triggered an increase in the take-up of technology by both businesses and individuals, and it is happening even faster than many expected.

“We have already reached the point where doing nothing is no longer an option.  Organisations – whether financial planning firms or large institutions – that fail to implement appropriate digital offerings will struggle to remain relevant.

“If we look at what is happening in the UK, the lessons are very clear.  The UK financial services market is a couple of years ahead of Australia in the digital trajectory and therefore provides a good signpost of where we are heading.

“Organisations are introducing broader and stronger propositions that will allow them to reach new clients, add real value to their existing clients, and consider better propositions for under-served client segments,” he says.

Mr Keary says a key UK trend is the increasing commercial benefits that organisations are seeing when introducing digital advice propositions.

“Our experience in the UK shows organisations who have implemented a digital advice model are experiencing significant reductions in organisational operating overheads and are servicing more customers while reducing advice delivery times.”

Growing demand for financial advice

Mr Keary says the need for financial advice, or guidance, has also accelerated.

“COVID-19 has significantly impacted our society’s mental health and wellbeing, particularly financial wellbeing. In Australia, research suggests that one in four people are under financial stress as a result of COVID.

“Digital advice solutions allow institutions to deliver financial advice at scale and help their customers achieve a more stable and secure financial future.”

Combining human and technological advice

Mr Keary says that since the onset of pandemic, people’s comfort levels with technology and digital interaction has risen dramatically.

“Consumers have shifted to digital across many categories, and the majority intend to continue using technology more post COVID. Digital financial advice has significantly evolved since the days of robo and now advises across insurance, savings and retirement. Whereas robo advice simply told people where to allocate their investment, digital advice tells people whether or not they should even be investing.

“Today, consumers are primed for financial institutions to use technology to do the heavy lifting such as data capture and digital factfinding, allowing financial advisers or branch staff to increase direct support to more clients and customers.

“In my view, technology and humans can work together to do this. The answer for institutions looking to deliver advice at scale isn’t about putting more technology in the hands of advisers, it’s about enabling the end-customer to participate and help with the process. This will be particularly important as declining numbers of advisers attempt to serve the growing demand from consumers.”

Expectations of social responsibility

Mr Keary said the growing expectation that companies will behave in a socially responsible way – including environment and governance considerations – is another trend that will continue to grow in 2022.

“Social responsibility expectations have accelerated during the COVID-19 pandemic, and will continue in 2022.

“The financial services industry is ideally positioned to contribute to meeting this demand.  Not only can it help people invest their money in a way that is socially responsible and deliver affordable digital advice for simple insurance, savings and retirement needs, it can also play a key role in improving people’s wellbeing.

“For example, raising financial literacy levels can help people make better financial decisions and create more prosperous futures.  Financial services companies can use technology to enable greater access to proactive financial education, calculators and financial health-check tools, in a cost-effective and efficient way,” Mr Keary says.

“Perhaps the best news for the industry in 2022 is that there is alignment to make it easier and more straight-forward for financial planners and institutions to offer this support and assistance to Australians.

“For the first time, the government, regulators and industry are all working together to improve the affordability of advice and ease of access.  The Federal Government and ASIC have both recognised the role that technology, via digital advice, can play in helping achieve this, and we anticipate that 2022 will see these ambitions come to fruition,” Mr Keary says.

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In the newly created role, Mr Baker will provide assistance and guidance to Ignition’s senior management and board in developing and executing the business’s strategy in the Asia Pacific region, and broader global pension fund strategy.  He will also help develop an advocacy plan, working with government and industry groups.

Mr Baker has over 30 years’ experience in the financial services industry in a range of senior roles in Australia and Europe, including founding industry consulting firm Tria Investment Partners in 2004.  More recent roles include global partner and UK & EMEA lead of NMG Consulting’s London practice; and head of proposition, product & strategy at AustralianSuper.

Craig Keary, CEO – Asia Pacific at Ignition, says that Mr Baker has a wealth of global industry experience that will be invaluable to Ignition as it continues its growth trajectory in Australia and the Asian region, and in the UK.

“Andrew has deep expertise and knowledge of the financial services industry, particularly in  product strategy, investments, policy and governance, and the insights he can provide will be extremely useful to Ignition’s leadership team and board.

“His experience spans both the private sector and not-for-profit organisations, and includes fast growth start-ups through to major institutions, which will stand Ignition in good stead as part of our long term growth strategy,” Mr Keary says.

Mr Baker says that he is looking forward to helping Ignition bring its world-leading digital advice technology in investments, insurance, super and retirement, to institutions.

“To complete their core mission for members, superannuation and pension funds need to complement quality products and investment outcomes with advice and assistance that is low cost, robust, scalable, and compliant.  Without this, many years of contributions and investment returns can be quickly dissipated via bad decisions.

“Ignition’s superannuation and retirement journeys allow the mission of super and pension funds to be completed, and members’ best possible retirement realised.”

Mr Baker is a Sloan Fellow and holds an M.Sc. in management (distinction) from the London Business School and a Bachelor of Business (economics/management) from Monash University.  He is also a graduate member of the Australian Institute of Company Directors.

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Craig Keary

There is a common perception in the financial services industry that digital advice does not meet the compliance requirements of Australia’s regulators, but this is not the case, says Craig Keary, CEO – Asia Pacific at Ignition.

The reality is that there are clear guidelines allowing institutions to provide compliant digital advice, he says.

“There is a real desire by all parties to lower the cost of advice and to make advice more accessible for Australians. To deliver on this, advice needs to be delivered at scale and complement the face-to face, comprehensive advice model. Digital advice can be part of the solution.

“However in our conversations with institutions about the role of digital advice, it became increasingly clear to us that there is confusion about how to successfully navigate the compliance considerations when offering digital advice solutions to their customers.

“Our own research has shown that digital advice is well and truly possible right now within the letter of the law and indeed is supported by ASIC, particularly when it comes to single-issue advice.  For institutions, there is a clear, logical and well-guided path to delivering digital advice compliantly.”

Mr Keary says there are three main myths about compliant digital financial advice.

“The first myth is that ASIC is not supportive of digital financial advice solutions and in particular single issue advice.  However the reality is that scaled advice is permitted by law and indeed is encouraged by ASIC.

“ASIC has provided considerable guidance on how to provide single or limited issue advice, and that guidance is appropriate whether the solution is human or digital.

“According to ASIC, the same rules apply to all personal advice on a particular topic, whether it is comprehensive or limited in scope. However, what must be done to meet the legal requirements, including the best interests duty and related obligations, can be ‘scaled up’ or ‘scaled down’ depending on the nature of the advice,” Mr Keary said.

The second myth is to do with whether institutions are able to recommend their own products to their customers.

“The concerns about recommending in-house products seems to have arisen out of the second ‘safe harbour’ test in the Future of Financial Advice reforms, which requires advisers to conduct a reasonable investigation into which financial products might achieve the customer’s objectives.

“However, ASIC has issued guidance that product providers can reliably follow to deliver single issue personal advice on their own products.

“The ‘scope of advice must be understood and agreed’ obligation is different for product providers who offer personal advice on their own products, particularly when provided digitally.

“The regulator also states that APLs can be limited and may be restricted to a class of product or in-house products. This is very suitable to a digital advice solution which can triage customers out of the advice process if a more in-depth or complex approach is required,” Mr Keary says.

The third myth is to do with the best interests duty and whether a technology-based approach can meet this requirement.

“The industry tends to think of robo-advice and digital advice interchangeably, and it is hard to align a robo-advice solution with the complexities of personal financial advice and best interests duty, so many institutions believe it’s not possible.

“But digital advice has evolved to a point where it can fully satisfy the best interests duty.  Unlike robo-advice, it is not limited to investments, and has in-built compliance and safeguards to quickly and easily identify when customers are not suited to automated advice – either because of affordability, suitability or complexity.

“We believe that properly developed and implemented digital advice can in fact help institutions meet their compliance requirements.  And institutions that recognise the intrinsic value that digital advice solutions can bring will reap the rewards of reduced operational and regulatory risk, and less time and cost spent on compliance. Ultimately, digital advice helps more people access affordable, flexible and high-quality advice when they need it most – closing the advice gap and increasing societal financial wellbeing ,” Mr Keary says.

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Paul McMahon

Paul McMahon has joined the board of digital advice provider Ignition as non-executive director for Ignition Advice UK Limited.

Mr McMahon has over 35 years financial services industry experience in the UK and Europe including in non-executive director roles.  His previous experience includes senior executive positions at Zurich Financial Services, managing director of AXA Sun Life (which later became Friends Life) and group marketing director at AEGON. He was CEO of fintech company FNZ, and founded his own advisory business in 2013 working with major UK and European financial services companies in M&A, change management, and digital transformation. He will be based in the UK, reflecting Ignition’s recent expansion in that market.

Mr McMahon’s appointment to the board follows that of Russell Scrimshaw earlier this year, who joined Ignition as deputy chairman and non-executive director in January.

Peter Meurer, chairman of the Ignition board, said that Mr McMahon’s appointment brings significant international experience and knowledge to the business as it continues on its growth trajectory.

“Ignition has grown substantially over the past six months and we continue to see a very strong pipeline of interest in our digital advice offering.

“Paul’s extensive industry expertise and understanding will be extremely valuable as we continue our expansion in both the UK and in Australia and Asia.

“We are currently establishing partnerships with leading financial institutions in these markets and Paul is ideally positioned to help support and guide these discussions, particularly in the UK,” Mr Meurer said.

Mr McMahon said he has long been a passionate advocate of the social and economic importance of financial advice and that Ignition’s approach aligns closely with this.

“Our challenge as an industry has been to ensure there is sufficient breadth of advice, delivered in ways that are widely accessible and affordable. Advances in the use of digitisation now offers the prospect of  removing historic barriers that have constrained advice capacity and makes it possible to do so in ways that bring a step change in quality assurance and customer convenience.

“I am excited about the scale of evolution in financial advice provision that we will see in the next few years. I am confident Ignition will become a valued partner to many institutions who will be central to shaping that change.”

Ignition was recently appointed by UK wealth manager M&G Wealth for delivery of its digital advice offering for its advisers and customers. M&G Wealth is part of M&G plc which is a global investment group headquartered in London, England, and listed on the London Stock Exchange.

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M&G Wealth is a wealth management company that provides tailored advice services and investment solutions.  It has £28 billion in assets under management and is part of M&G plc which is a global investment group headquartered in London, England, and listed on the London Stock Exchange.

Expected in the last-quarter of 2021, advice will still be provided by a human adviser but underpinned by digital technology. The service will initially be targeted at the company’s existing customers before being offered more widely and will reduce the time and cost to deliver advice, allowing improved outcomes for those seeking to invest or retire with smaller sums of money.

The service will be delivered through M&G Wealth’s existing advisers and be complementary to the much wider support M&G plc provides to independent financial advisers. 

Richard Caldicott, Deputy CEO, M&G Wealth Advice, said: “We want as many people as possible to access advice in an efficient, understandable, convenient, affordable and sustainable way.

“There is no doubt that there is a large population of investors who would benefit greatly from financial advice but they perceive it to be inaccessible and too costly. This is at the root of the advice gap and something we are fully focused on addressing.

“We want to be innovative, flexible and accelerate our delivery in all aspects of advice through first class digital experiences for our customers. Our whole focus in M&G Wealth is to enable our clients to have the best possible financial futures by building a planet friendly advice service which is accessible and inclusive for all.

“After a thorough due diligence process Ignition Advice is a fantastic partner to enable us to do just that.”

Terry Donohoe, CEO Europe, Ignition, said: “Digitally-led solutions make advice more accessible, easier to navigate and more cost effective, while still retaining the benefits of human relationships.

“Our experience in Australia and the Republic of Ireland has shown us the value of this model to consumers and the potential it has to democratise financial advice.

“We share M&G’s commitment to delivering accessible, inclusive advice for all and we look forward to bringing our tried and tested tech to the UK market with M&G Wealth Advice.”

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Mr Keary will be based in Sydney and have responsibility for the growth of Ignition in Asia, in particular China, Japan, Singapore and South Korea.

He has over 30 years’ experience with blue chip international companies in both Europe and Asia.  Mr Keary was most recently managing director Asia Pacific of AMP Capital, based in Tokyo.  He has also worked at Westpac where he was executive director, head of distribution & sales, equities and retail markets, and at Commonwealth Bank and HSBC.

Mr Keary is currently undertaking a PHD part time with the research being on “How will the financial planning industry need to adapt to changing customer needs and circumstances” at Western Sydney University.

Mike Giles, CEO of Ignition Advice, said that expanding into the Asian market is the next step in Ignition’s growth strategy.

“We are already well-established in UK and Europe, and have our base in Australia so it therefore makes sense to continue our growth in the Asian financial advice market.

“There are significant opportunities in countries such as China and Japan to utilise technology to expand the reach of financial advice.  Craig’s substantial experience in the Asian market will be extremely valuable to our growth plans, not least his understanding of the different cultures and the ability to lead teams across multiple jurisdictions,” Mr Giles said.

Mr Keary said that, having recently spent almost four years living and working in Asia, there are distinct opportunities for Australian companies doing business in Asia.

“Australia’s robust regulatory regime, the breadth and depth of its financial services industry through the superannuation system, and its growing reputation in technological innovation, means Australian companies are viewed very favourably in Asia.

“I am looking forward to helping Ignition bring its expertise and experience to the Asian market, particularly as it offers a solution that helps enhance the financial wellbeing of investors – something I am particularly passionate about,” Mr Keary said.

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Mark Fordree

Technology is poised to play a crucial role in helping more Australians access effective, safe and affordable financial advice, at a time when the number of advisers is declining, says Mike Giles, co-founder and CEO of Ignition Advice.

“There is increasing appreciation that technology can be an extremely valuable tool in the financial advice industry.  Important lessons have been learnt from the mistakes made in the past, including the limitations of roboadvice and the need for human interaction,” Mr Giles says.

“On top of this, we’ve seen the take-up and penetration of technology grow exponentially, by people who would never have considered using virtual or online services before, due to the lockdowns and ‘working from home’ requirements over the past 12 months.

“As a result of these developments, we believe the opportunity for technology to change the way that advisers deliver advice, and the way that Australians access it, has never been greater, and at a time when the need for Australians to get advice has never been more important.”

Mr Giles points out that the growing role of technology does not eliminate or even reduce the need for financial advisers.

“Digital advice has evolved from the days when it was envisaged that roboadvice could be a standalone online offering. Now there is recognition that human interaction and intelligence needs to be a vital component of the advice offering.”

And overwhelmingly, he says, advice also needs to be easy to access and affordable.

“Properly developed and implemented, technology can help advisers deliver compliant, scalable and cost-effective advice to more clients, enabling them make the best financial decisions for their future.

“We’ve already experienced this in Europe amongst our enterprise clients, where there is strong evidence of increased engagement with their own customers who are adopting digital advice solutions,” Mr Giles said.

Mark Fordree, co-founder and director at Ignition Advice, says technology will also play an important part in allowing other institutions, such as insurance companies and superannuation funds, to provide simple or single-issue advice to customers.

“Regulatory changes have resulted in major players walking away from vertically integrated models,  ultimately leaving millions of customers without easy access to advice.  At the same time, government and regulators are talking about the need to lower the cost of advice and to make it easier, and safer, for people to access.”

He says there is scope for other institutions to fill this gap, and to deliver appropriate simple advice in a safe and flexible manner.

“But this evolution in the advice offering will not be at the expense of existing financial advisers. Rather, the future is one where digital technology will be a complementary offering to a market that still sees advice as something that is too expensive or only for the very wealthy.

“Indeed regulators such as ASIC have indicated that they believe single-issue advice can help close the advice gap, and in this environment, it is inevitable that technology will provide the missing piece of the advice puzzle,” Mr Fordree says.

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(L to R): Mark Fordree and Mike Giles

Fintech Ignition Advice continue their growth with a move into the UK market establishing new teams in London and Edinburgh.

Terry Donohoe, CEO Europe, Ignition Advice says, “We are delighted to bring our class leading digital advice platform to the UK. By bringing advisers and their clients together on the one advice platform, we enable our partners, financial institutions, to truly scale their advice propositions. With rapid implementation times and great user experiences, the Ignition Advice platform provides the flexibility demanded by financial institutions.”

The firm first gained a presence in Europe in Dublin in 2017. Mike Giles, Cofounder and CEO says, “Ignition Advice is well experienced in operating within local regulations, including the pre and post trade transparency requirements of MiFID and the consumer protection standards for insurance firms under IDD. As part of the move into the UK, we are further localising all products for the UK market, over layering UK FCA regulatory standards to meet the needs of British clients.”

David Hempson joins the company as its new Business Development Director UK where he will launch and lead Ignition’s sales effort in the UK. With twenty years of experience in financial services sales, including roles at EValue and FE FundInfo, Hempson brings a deep understanding of the investment and wealth sectors and a passion for digital financial advice.

David Hempson, Business Development Director UK, Ignition Advice says, “Ignition’s proven digital advice technology and the strong appetite from UK financial institutions for customer first digital engagement advice solutions make an exciting combination. We look forward to bringing the UK market live digital advice solutions for insurance, pensions and wealth in 2021. Our simple hybrid technology integrates seamlessly with adviser-led and adviser-assisted customer experiences. The challenges of 2020 have accelerated the need for digital solutions and Ignition Advice is perfectly positioned to help.”

Ignition Advice teams continue to expand globally, with strong hires in both the Dublin and Sydney offices, supporting the UK expansion and servicing new client acquisition.

Mark Fordree, Cofounder of Ignition Advice commented, “Ignition’s highly flexible platform is able to serve the needs of a broad spectrum of financial institutions. Post Brexit, the UK is establishing a strong lead in fintech and digital financial services, and we are pleased to enter the market at this time. Ignition continues to hire leading technologists to our global team to support our growing client base.”

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