In Part Two of our Future of Advice discussion with Allison Dummett from Matrix Planning, we explore the influence of regulation and technology on the financial advice industry.
What are some of the rules and regulations putting advice out of reach for many Australians that need another look?
There is a lot of regulatory red tape. I think we should give it a new name of ‘reg tape’ and I think we have arrived at this place out of a very genuine attempt to make advice more trustworthy, more respected, more reliable to the Australian people. But I think we could do a great deal to simplify how people access and receive advice, and I’ll give you an example.
Say you’re a client who is in pension phase, so you’ve retired, you’re drawing on the money you worked so hard to earn and your adviser wants to change your investments ever so slightly – that requires an advice document. Because of some of the increased cost that some of the regulation has put on a financial advice practice, licensees etc., the cost to get that advice has gone up.
So, we’ve effectively gold-plated the advice to be provided to someone who really only needs a very simple transaction, or some assistance with that. Yes, it still requires somebody with the knowledge and education and who complies with the Code of Ethics – you want that reliability in the system. But somehow we need to be able to step-back and say, in many instances, that we can trust that all the reforms we’ve put in place will support that advice to be carried out in the right way without gold-plating the way in which it’s provided.
How is technology playing a role in the delivery of advice? And what impact has this had on the market in recent times?
I think the COVID-19 crisis has really brought forward a huge new way of dealing with clients and advisers and for that relationship to be managed. I think this is going to transform the way advice is provided in Australia.
We have had some advisers perfectly prepared to use online meeting technology. I know of one practice where they have virtual meetings with clients, they record everything – that’s their filing system. So, there are some people that are at the leading edge. What’s been interesting is because everyone is so aware of wanting to protect the vulnerable people in society, suddenly out of care for clients – advisers have said ‘let’s have an online meeting’ and if client has been resistant and said ‘I’ll wait’ the adviser has said ‘no, I don’t know when it’s going to be possible for us to get together in person – let me show you how we can have an online meeting and I’ll talk you through all the technology, if it doesn’t work the first time, we’ll persevere.’ And it’s happening. So, this is a very exciting transformation. Not that just advisers are willing to have online meetings, but that clients are receptive to them.
There’s a lot of upside in teaching people about this kind of technology, people who may never have Skyped or done FaceTime with family, once they’ve been taught how to do this in a business context they see how easy it is.
But we’ve also had to grapple with some issues as a profession and a lot of those related to our reliance on ‘wet signatures’. So, situations where normally clients are asked to sign paperwork with a pen and then we scan or send the originals back – particularly to trustees or people with whom we have formal agreements.
So to suddenly have to verify things in a virtual manner, like people holding up a licence in their FaceTime call or in a selfie, all of those things happened – and were allowed to happen – because of the pressures of COVID-19 and social distancing. But what they will do, is they will transform the way we think about how those things can be done and I think we’ll see more efficiencies.
To read Part One of Allison's insights, see here.
To stay updated on the Future of Advice Report, see more here.