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’.