The jury is out on fintech advice

Financial advisers around the country disagree on whether financial technology can help reduce the cost of providing advice, and argue that the best it can do is facilitate a complicated process.

In individual submissions to the Quality of Advice Review Issues Paper, many financial advisors detailed their answer to the question of whether fintech could reduce the cost of providing advice and whether it was a significant benefit to advisors and consumers.

Michael Baragwanath, a chief adviser from South Australia, firmly denied that fintech was the solution to the crisis, saying that if the market could understand the current nightmare and chose to digitize the solution, the big banks and wealth companies would have already done so.

“Many have spent HUNDREDS OF MILLIONS OF DOLLARS and have totally failed.

“The question set presented focuses on fintech or financial technology platforms to solve problems and create efficiency. This is not a practical framework for thought. Unless the government proposes to provide a fintech platform or create more efficient wholesale data access channels, the discussion is a waste of time. “

Several respondents said that the level of regulation made companies nervous about using technology to meet the requirements, and asked if other professions would be asked to rely on technology.

Western Australia-based adviser Ray Ong said: “Financial planning is a highly nuanced profession that requires intellect (technical knowledge), emotional intelligence, investment experience, business development skills and business administration. Fintech can help, but it also has a significant cost. Fintech should not be the solution to the problem caused by the regulations. Can fintech significantly replace a psychiatrist? ”

Steve Melling, a Melbourne adviser, commented: “Technology tends to improve efficiency. However, it seems that the primary obstacle is over-regulation, not a lack of technology.

“The changes apply to all licensees – technological solutions do their best to work within these limits.”

However, Michael Rice, founder of financial services consultants, Rice Warner, said that all forms of simple advice, as defined in this submission, can be provided using technology.

«The advice can be structured via online questions and tools, either as a complete set, or as an aid for an adviser. In both cases, the cost of giving advice will be much lower than it is today, he said.

“[But] The fact that advisers make limited use of fintech solutions shows that current law is a barrier. It is clear that advisers will benefit from technology, but the risk of compliance is too high. “

Regarding whether financial advisers and consumers benefited from advisers who used fintech solutions to help with compliance instead of giving advice, Baragwanath said: “Unless the government proposes to offer a fintech solution, I can not see the benefit of this question “.

Ong disagreed that advisers and consumers benefited from advisers using fintech for compliance purposes, saying that the best it could do was help an extremely complicated process.

“If the process can be less complicated without compromising the results, it is an immediate benefit.”

These contributions to the review were made on an individual basis rather than as representatives of their firms.