The digital advice questions in the Quality of Advice Review (QAR) survey missed their mark, meaning the opportunity to genuinely understand adviser views on fintech has been squandered.
In what may well be the largest survey of financial planners in Australia, the QAR asked only three questions in relation to the use of technology and unfortunately, they were the wrong questions.
In the terms of reference for the QAR, section 4.4 stipulates that, ‘the review should pay particular attention to how technology and digital advice might enable mass market adoption of low-cost advice’.
The survey questions asked advisers how much they currently rely on automated advice technology, how much they expect to rely on it in the next five years, and why they would or would not use it over the next five years.
One of the options provided for why an adviser would not use the technology in the next five years was: ‘My clients would not be able to/do not have the financial literacy to navigate automated advice technology’.
This presumes that automated advice technology is a black box solution that takes information directly from the consumer and provides financial advice to them or, in the common vernacular, robo advice.
The design and delivery of robo advice is not something that most financial planners have the time nor the resources to deliver in their own practices. If the Government is interested in what robo advice is currently available, to what extent it is being used, and potential developments over the next five years, then a targeted survey should be asking that question of the larger dealer groups, fund managers, tech companies and other entities that do have the resources and the incentive to develop them, rather than the end users who have little, if any, influence on these outcomes.
Section 4.4 of the QAR also states that the review will have regard to understanding, ‘enabling technology and the development of technological solutions’. This could well be read in conjunction with section 2.1 of the QAR which looks for, ‘opportunities to reduce costs and remove duplication, recognising that the cost of compliance by business are ultimately borne by consumers’.
With regards to technology solutions, the majority of individual financial planners are most concerned about how they can streamline their processes to provide quality advice which is valued by their clients and fulfills compliance expectations, at a reasonable cost.
The Australian Financial Advisers Wellbeing Report 2021 determined that 82% of financial planners surveyed found the government regulations and compliance demands highly or very highly stressful and 57% found coping with this workload highly or very highly stressful.
The report went on to say that a small group of financial planners were not struggling with these issues because they had systemised solutions, and recommended that advisers, ‘seek out and even demand support from licensees, associations and industry companies to provide access to systems that enable efficiencies and compliance work’.
Clearly, there is a need to provide a solution to this problem and most financial planning fintech providers in Australia are focused on and have a commercial incentive to deliver these solutions. A better outcome for these fintech providers, and the industry in general, would have been for the survey to ask questions that led to a better understanding of how this type of technology is currently being used to solve these issues, what gaps financial planners perceive in existing technology, and what the barriers to adopting such technology are.
This information could then have been used to determine what technology solutions financial planners are seeking, in order of priority, and perhaps could even have resulted in targeted government incentives to achieve this objective.
By limiting the technology question to robo advice, the survey will not produce information the financial planning industry, technology providers, or the government legislators can use. Truly, a wasted opportunity.
