Man vs Machine: Is Fin-Tech and Robo Advice Really a Threat to Financial Planners?

Written by: Jeremy Kirk

Financial services communicators and marketers would be well served to pay close attention to the happenings at the Financial Planning Association’s (FPA’s) annual congress, where issues such as fin-tech, digital disruption and the power of integrated marketing for financial advisers are among the many hot topics for discussion.

As 1000 financial planners prepared to descend on Brisbane for the Financial Planning Association’s (FPA) annual Congress starting today, fin-tech start-up Map My Plan (MMP) threw down the gauntlet on what it believes the financial planning industry’s future focus should be.

The Sydney-based company released the results of a detailed survey it commissioned into the financial wellbeing of working Australians, which showed that more than a quarter were “financially unfit”.

The report, which was backed by Hon. Bernie Ripoll MP, also revealed half of Australia’s workforce was worried enough about their financial situation to impair their productivity at work to the tune of a potential $60 billion per year.

The survey findings were used to develop an Australian first: a Financial Fitness Index , that looks exclusively at the situation of working Australians and enables them to compare their own situations or “scores” with that of peers and others.

Fast forward to the FPA Congress two days later and discussion on how to serve the vast majority of Australians who did not have funds to invest beyond super and paying off mortgages drew a mixed response from professional planners.

Some highlighted real issues being able to effectively or sustainably service this sector without sufficient fees to cover the time and costs involved. Others agreed ways to access advice for lower income families needed to be found, even if it put their fees under pressure.

Views were also divided on whether so-called computer-powered ‘robo advice’ platforms, being developed by the Big Four banks and Macquarie Bank among others , could help deliver this, or whether it was – as one Congress presenter postulated – a potential industry “terminator”.

ASIC Chairman Greg Medcraft weighed in on the side or the majority of working Australians this month when he said that automation could reduce the barriers of access to advice by reducing fees and conflicts.

The leadership of the FPA has been less worried than many of its members, calling ‘Robo’ advice a potential means to free up planners to focus on more strategic client work.

However, it was through the surprise appointment today of Dante De Gori as incoming association CEO that the FPA Board has given its strongest indication yet that consumers will be the key additional focus for the Association going forward.

Mr De Gori is the FPA’s General Manager Policy and Conduct and will take over as CEO when current CEO Mark Rantall steps down at the end of February.

Mr Rantall is a banking and advice industry veteran and has been widely credited with doing the heavy lifting that helped raise adviser education and professional standards and persuaded the Government to enshrine these higher standards in legislation next year.

During his five-year tenure Mr Rantall managed to help achieve eight of 10 key FPA initiatives and it is likely Mr De Gori’s intimate familiarity with and ability to keep the faith on these while achieving the final two that has granted him the leadership nod.

In his current role Mr De Gori provides organisational continuity and also represents a younger generation of social media and tech-savvy financial advisers, keen put financial planners on the same reputational footing as accountants, lawyers, GPs – and regarded as equally indispensable.

While Mr De Gori was reluctant to outline his plans today, with Mr Rantall still in charge, earlier this month he talked about the need to make financial advice more accessible for all consumers and how the Government had been reluctant to address FPA recommendations because of fiscal concerns.

“Making financial advice more accessible could be tackled by making advice fees tax deductible, or offering rebates to assist low to medium income earners to access advice."

“With our aging population, more Australians need qualified financial advisers. It should not be just for those who are wealthy; financial advice can and should benefit everyone,” he said.

With internal member reforms largely completed, expect the FPA to pivot its focus to the broader base of Australian consumers, and to removing the barriers that are blocking them from accessing financial advice; barriers such as a lack of trust after industry scandals, cost and importantly, financial literacy.