Technology holding advisers back

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As the sector moves towards fee for service, advisers should provide scalable advice, but current technology has limited their ability to do so.

ISN and Rice Warner research recently suggested that FoFA would lead to an increased uptake of scaled advice, but this received backlash from the financial planning profession.

Decimal managing director Jan Kolbusz says that it is the definition of scalable advice that is causing the friction within the industry.

“What happened is scalable advice has been used in some quarters to mean superannuation-only advice. That’s not scalable advice, that’s just advice limited to your super account. If you define it like that it’s not surprising that many financial advisers would say ‘hang on’…”

He says that to Decimal, scalable advice means to start small and to go up step by step, progressing to full advice if needed, but not if it’s unnecessary. However, the current technology available to planners has limited their ability to model different strategies and options for clients.

 “So much of the technology delivered to the advice community has really fallen way behind what’s expected in a digital age…ordinary folks should be able to go online, they should be able to engage as much as they want. When they’re ready to engage with an adviser, an adviser should be able to pick up exactly where they left off.”

Advisers should be able to provide scalable advice if it is appropriate, but need to qualify the client properly and they need to keep a record of everything to capture the rationale behind decisions.

Kolbusz says the best way to determine a client’s advice needs is to let them determine it themselves, but the current lack of sophisticated technology has limited clients’ and advisers’ ability to do so.

“The adviser’s in this dreadful catch-22 where it takes so long for them to set up modelling in the current technology that they have to make a commercial choice as to ‘how many options do I look at’, because the client’s not in the position to pay for all this time.”

Kolbusz went through the advice experience himself and was disappointed when the adviser could only model a couple of strategies, for $2,500. However, he says that if clients have access to the right tools at home to educate themselves and look at multiple strategies, they should then be able to visit an adviser who has access to all the same information.

Kolbusz says that this will make the adviser’s time more efficient and more effective, and allow them to determine how much advice a client needs, without charging for too much ‘face-time’.

  • Michael Kinens on 29/07/2013 2:03:43 PM

    I don't believe it is accurate to suggest that the "technology delivered to the advice community has really fallen way behind". Rather, I would suggest, the focus and effort required to be ready for the mandatory FoFA requirements (ie. annual fee disclosure statements and Best Interests) has resulted in few being positioned to explore the potential benefits in providing scaled advice.

    Given the above, I fully expect the number of advisers contacting us to discuss how they can provide a differentiated, scaled advice service will increase from the levels we are currently experiencing.

    One point that I would agree upon, is the need to ensure that the solution is efficient and forms part of the same solution that advisers use to deliver non-scaled advice from.

  • Sean on 29/07/2013 10:49:37 AM

    "Kolbusz says the best way to determine a client’s advice needs is to let them determine it themselves."

    That's nonsense. If they had the skills, time and inclination to work out what advice they needed, they'd be able to work out what to do themselves.

    The people who need advice most are those without the knowledge and/or the time to do it themselves.

    If you think they can decide what's best without you, you'll stay a product pusher and never be a respected professional.

    I don't go to the dentist and tell him what work I need done, I go to the dentist, he examines my teeth, identifies problems, proposes solutions, arranges for the solutions to happen and then says come and see me in 6 months for a review!

  • Chris Risteski on 29/07/2013 10:18:19 AM

    Given the Financial Services industry is a very new profession and still trying to finds it's identity as a profession.
    if the Financial Services industry is serious about the future of this profession we need experienced and educated people to debate this space.
    Think about the following scenario for a moment: A person going to the doctors for a cold, does the doctor tell the person they need to address all the person health issues or does the doctor address the cold.

  • Alistair on 29/07/2013 10:12:34 AM

    Yet another example of BS from this government. Ill conceived policy on the run approaches like this leaving the outcome desired more of a mirage than reality. A proper definition of scaled advice needed. No delivery of the definition. A rush job thought out by nutters with an agenda to cause confusion and destruction to an industry than could address a number of fiscal and economic issues given an ageing population. The short sighted vision of our leaders at the FPA allowed this to occur. Our government hell bent on destroying the FP industry is nothing more than the disgrace we see today and have initiated this agenda. The consumer is forgotten in all of this and in fact will be on the receiving end of higher taxes, higher costs of living and compromised retirement outcomes. A message to the leaders of the FPA and Labor. Your time is near and that right soon. Current leadership on both fronts is nothing short of pathetic. As for grandfathering. Having a business owner work so hard for a multitude of years and then to see that destroyed because of an agenda of this pathetic excuse for leadership in government and the FPA is a damn shame.

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