Digital advice is now being touted by some super funds as perhaps the best solution to the growing advice gap and the ‘Silver Tsunami’ of retiring Australians currently exiting the workforce and in need of advice.
While many professional advisers might gawk at the idea of a super fund giving advice, the continually falling number of advisers and the continually rising number of unadvised retirees suggests that perhaps the profession should look at all the options in front of it to help.
One benefit for super funds is that this digital advice has also led to greater levels of member retention.
“What we’re seeing through our clients is those who have members who do interact with the tools see much higher retention rates,” Nicole Kennedy, managing director at Bravura, said.
“If you’ve met their needs, they feel confident and they’ve got that trust. They’re less likely to start looking for alternatives because they haven’t experienced that friction point that makes them question whether they should be considering other options,” Kennedy said.
But where does this leave advisers? For many, the idea of cheap digital advice could be daunting, especially as many potential future clients look to it as an alternative to expensive in person services.
Michelle Lusty, head of advice products at Midwinter, agreed with this sentiment to an extent.
“If they go to an external financial adviser, they will open up any possibility options for them. If they go to their super fund, they may understand, actually, I can still meet a lot of that just staying in the fund, and they actually can help me,” she said.
Lusty reassured, however, that so far, this hasn’t been the case.
“The trick is the right level of triage, so that you are not getting wrong advice when they’ve got more complex needs,” she said.
“In that member digital journey, you’ll actually look for clues that this is not suitable for the member because they’ve got more complexity, too much debt, or goals that sit outside the scope of the tool.”
These clues that then can direct members to in person advice.
Other studies have also concluded that digital advice poses little threat to actual in-person advice.
A report released by the Financial Services Council (FSC), based on analysis by CoreData and Borromean Consulting, found digital tools are emerging as an accessible entry point to financial advice, particularly for those who were previously unengaged with the sector.
“Digital advice is not pursued as an end in itself. It is framed as part of a broader service ecosystem, supporting member decision-making across accumulation, transition and retirement,” the report states.
“Financial advice businesses are not, for the most part, deploying consumer-facing digital advice. They are digitising the advice process itself, using technology to improve efficiency, consistency and client experience within an adviser-led framework. Human judgement remains the organising principle.”
