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Will the QOA recommendations reset digital advice?

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31 January 2023 by Rhea Nath, Money Management Magazine

Article link: https://www.moneymanagement.com.au/news/financial-planning/will-qoa-recommendations-reset-digital-advice

As the financial advice industry awaits the Federal Government’s response to the Quality of Advice (QOA) Review, many hope for a proper ‘reset’ rather than selective implementation of recommendations around digital advice.

Craig Keary, APAC chief executive at Ignition Advice, expressed this would be the year organisations move from strategic thinking to strategic execution around digital advice.

“This is an opportunity for a desperately needed reset of personal financial advice. We hope that the Government opts to implement the Review's recommendations in their entirety, rather than being selective,” he said.

Executives and their teams were already thinking broadly about the role of technology in helping serve more clients better, Keary added.

“Headwinds and economic challenges are almost certain to continue in 2023, so the need for Australians to have safe and affordable access to guidance and advice that can help them manage their money, protect their wealth and plan for a comfortable retirement is even more important.”

While Michelle Levy’s advocacy for digital advice remained divisive among the adviser community, Keary was impressed by the approach to keep the end consumer in mind.

He elaborated: “Levy’s brief was to think about affordability and accessibility for the end consumer, not interests of the industry, and the Proposals Paper reflected that significant changes to the current state were needed to achieve this.

“Post the Royal Commission, we have ended up with advice as a cottage industry which has become unaffordable for many who would benefit from it. Tinkering at the edges will not help.”

Objections were based on a misunderstanding of the scope of advice, he noted.

“Most contention has focused on product replacement, but this is just one small part of what Levy would consider as personal advice,” Keary offered.

“For material improvements to be achieved, realistic solutions must be considered including the role of technology to scale advice and make good advice affordable and accessible to all Australians who want and need it.”

He believed greater digital adoption would be a major trend in 2023, with hybrid advice models as seen in the UK showing strong evidence of greater access and affordability.

Adviser Ratings, too, highlighted implementation of new technology like artificial intelligence as one of the major trends of the new year.

“Digital advice is perfectly suited to delivering single issue personal advice, for those with simpler or more episodic advice needs. It also clearly preserves the important value proposition of financial planners, who serve the more complex needs of consumers who have the need and budget for a holistic approach to managing their finances,” Keary said.

With the right provider, he said, implementing digital advice could be faster, cheaper, and less disruptive than most digital projects.

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