Despite significant industry investment in digital advice solutions and growing regulatory support through initiatives like the Quality of Advice Review, Australian consumers remain cautious about adopting digital financial tools. The 2024 Australian Financial Advice Landscape Report revealed that fewer than one-third of Australians have embraced digital solutions for managing, investing, or trading money - a stark contrast to the industry's enthusiastic push toward digital-only advice solutions. Despite the current consumer hesitancy, this commitment to digital-only advice solutions is something for the financial services industry to contemplate.
Industry Push vs. Consumer Reality
Despite regular trade media stories about financial services organisations launching new digital advice solutions and some providers declaring 2025 as 'the year of digital advice', consumer adoption remains tepid. This disconnect underscores the need for the industry to adopt a more consumer-centric approach to digital-only advice transformation, ensuring that current solutions truly address consumer needs and concerns as their wealth grows.
The Age Factor and Digital Comfort
The data reveals a clear generational divide in digital comfort levels, with interest in digital investing showing a consistent decline as age increases. Among younger Australians under 25, interest has grown significantly from 34% to 52% over the past year. This enthusiasm gradually diminishes through the age brackets, with those aged 25-34 showing 44% interest (up from 40%) and continuing to decline until reaching just 15% among those aged 55-64 (up from 11%). For those over 65, interest drops below 10%. This declining comfort with digital solutions among older demographics is particularly enlightening as these age groups typically need financial advice and the assets to pay for it.
Figure 1: Percentage of population interested in using technology for investing
Source: Adviser Ratings, 2024 Australian Financial Advice Landscape Report
The question is, is the decreasing uptake in digital advice an age thing, or is it just a cheap and cheerful tool for those with less at risk and less ability to pay?
Understanding Consumer Hesitancy
Trust and Security Concerns
Academic research identifies several key barriers to digital advice adoption. Belanche et al. (2019) showed that familiarity plays a crucial role, with those more acquainted with AI and digital tools generally showing more positive attitudes. However, security concerns remain paramount, with many consumers expressing significant reservations about sharing personal financial information through digital platforms, as highlighted in research by Sathye (1999).
The perceived value proposition presents another significant hurdle. Laukkanen's 2016 research demonstrates that consumers need to see clear, tangible benefits in order to adopt new financial technologies. Even when consumers do adopt digital tools, Adapa and Roy (2017) showed a significant gap often exists between initial adoption and consistent usage of the advice provided, which is one critical requirement of good advice.
Consumer Attitudes Toward AI
The AFLR 2024 reveals a nuanced picture of consumer attitudes toward artificial intelligence in financial advice. While 38% of consumers express positive sentiments about AI use in financial services, nearly equal proportions (34%) remain pessimistic, and the remaining 26% take a neutral stance.
Figure 2: Consumer attitudes towards AI in financial advice
However, when digging deeper into this, consumers show measured optimism when considering AI's specific role in financial advice, but in one particular way. A significant portion (31%) believe AI will enhance financial advisers' capabilities rather than replace them, with only 12% expecting AI to lead to adviser replacement. Nearly a quarter of respondents (23%) anticipate AI helping to reduce advice fees, while 24% expect no significant impact on the industry. In short, AI will make improvements to the accessibility and capacity of professional human financial advisers, but consumers aren't looking to technology to replace their financial advisers any time soon.
The Affordability Challenge Versus The Value of Human Advice
The relationship between digital solutions and advice affordability presents a complex picture, and the question remains whether digital advice is solving the affordability challenge as intended. On the one hand, most consumers (67%) indicate a willingness to pay up to $500 annually for advice, with diminishing numbers willing to pay higher amounts - 19% would consider $500-$1,000, while only 14% would pay more than $1,000. Given the regulatory and operational costs involved, these price points create significant challenges for delivering even digital-first solutions profitably.
Figure 3: Consumer willingness to pay for financial advice
Source: Adviser Ratings, 2024 Australian Financial Advice Landscape Report
However, the AFLR 2024 demonstrates clear benefits of human financial advice through measurable financial literacy and confidence outcomes. Advised Australians consistently demonstrate higher levels of financial literacy, with 44% indicating above-average knowledge compared to 33% of their unadvised counterparts. This advantage extends to financial confidence, with advised individuals showing significantly higher confidence in their financial future and 23% more likely to feel confident about their finances overall. These findings underscore the value and importance of human financial advice across the industry.
Emerging Best Practices
Leading practices are adopting hybrid models that leverage technology while maintaining human relationships. Successful technology integration focuses on four key areas: enhanced client communication, improved administrative efficiency, sophisticated data analytics, and expanded client access to services.
Modern practices employ automated updates, secure messaging systems, and digital document sharing while maintaining personal contact for complex discussions. Administrative processes benefit from automated compliance monitoring and streamlined onboarding, while sophisticated data analytics enable a better understanding of client behaviour and portfolio management. Client access has evolved to include 24/7 portal availability and educational resources, supplementing rather than replacing personal adviser interactions. Returning to AI momentarily, AI can play an important role in answering client questions at any time of the day, but in style of and with the knowledge of their financial adviser.
Successful practices use digital advice tools to emphasise client education, providing resources to support digital literacy while maintaining transparent value propositions.
Security and trust-building remain paramount. Leading practices implement comprehensive cybersecurity measures and clear data protection policies to comfort clients using these tools. Regular security audits and transparent communication about security measures help build and maintain client confidence in digital solutions.
Industry Response and Adaptation
The approach to digital solutions continues to evolve across the advice profession. Successful practices develop hybrid service models that combine digital efficiency with human expertise. These models typically feature tiered service offerings based on complexity, allowing practices to match service levels with client needs and preferences.
Across the broader financial services industry, though, it is questionable whether just offering digital advice tools to customers is more than for show. This approach probably misses the point of making advice more accessible to consumers by optimising data flows, focusing on actual rather than perceived compliance and efficient, client-friendly advice delivery rather than long confusing SOAs.
The Path Forward
The affordability challenge requires developing sustainable pricing models that create value through efficiency while maintaining service quality. Therefore, success in digital advice adoption requires a balanced approach that recognises consumer preferences while leveraging technology appropriately. Practices must acknowledge generational differences and varying comfort levels with technology while providing choices in engagement methods.
However, the key point is that clients want technology that enhances rather than replaces human advice. This technology should focus on efficiency and accessibility while maintaining quality and personalisation. Building trust remains crucial and can be achieved through transparent communication, clear value propositions, and consistent service delivery.
Conclusion
The data suggests that while digital solutions will play an increasingly important role in financial advice, their success will depend on how well they're integrated with human advice services. The key to bridging the current adoption gap lies not in pushing purely digital solutions but in developing hybrid models that combine the efficiency of technology with the trust and understanding that comes from human interaction.
The message for practices looking to expand their digital offerings is clear: focus on solutions that enhance rather than replace the adviser-client relationship and ensure that technology adoption is driven by client needs rather than industry trends alone.
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