INTHEBLACK June 2022 - Magazine - Page 52
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As a member of the Australian Government’s
FinTech Advisory Group, established in 2016,
ASIC believes robo-advice does have an important
role to play.
“On the advice process side, there is potentially
opportunities for technology to introduce efficiencies
into the advice process,” ASIC says.
“As part of a consultation paper, we canvassed the
concept of digital advice. And, while there wasn’t
an overwhelming response of people wanting to go
down that business model, there was a considerable
level of interest in adoption of technology to the
extent that it might introduce efficiencies in the
advice process.”
Jane Hume, former federal financial services
minister, says that, while “no one has yet cracked
the nut” of full robo-advice service, it does not harm
financial advisers or their businesses.
“When someone puts together a fantastic product,
I also don’t think robo-advisers are going to replace
the 18,000 or so financial advisers practising in this
country.
“What robo-advice and other digital tools will do
is offer an alternative for people who don’t currently
have access to an adviser, or who wouldn’t pay for an
adviser.
“It will get young people more engaged with their
finances, and it may act as a gateway to full-service
financial advice.”
Woods agrees and says robo-advice tools are
becoming smarter by focusing on niche segments
rather than trying to be all things to all clients.
“They are really trying to build out their solutions
by capturing a niche segment and then having
building blocks on top of that.”
On regulation, Woods says companies that have
been in the robo-advice market for a while can
see how aggressive the regulator can be and how
legislation can change quickly.
“To a certain extent, ASIC has got its own
sandbox to try and increase innovation and offer
52 ITB June 2022
Above: Jane Hume,
former federal financial
services minister
“WHEN SOMEONE
PUTS TOGETHER A
FANTASTIC PRODUCT,
I ALSO DON’T THINK
ROBO-ADVISERS ARE
GOING TO REPLACE
THE 18,000 OR SO
FINANCIAL ADVISERS
PRACTISING IN THIS
COUNTRY.”
JANE HUME, FEDERAL
FINANCIAL SERVICES
MINISTER
these new sorts of solutions. But it’s a fine line to
when does it encroach on best interests, and whether
a provider starts offering advice, as opposed to just
a platform.
“In the UK, they are testing algorithms to
ascertain whether they are providing actual advice
and should be regulated more than they are.
“ASIC is likely to take a similar approach, while it
also looks at the innovation agenda being promoted
by the federal government and the relaxing of rules
to allow people to look after their money.
“That said, I think ASIC sees issues in terms of
the speed at which some of these players have come
into the market over the last 12 months, especially
on the trading side.”
Goncalves-Pinto adds that household budgets
are not limited to investments in stocks and bonds,
and involve decisions around housing, the tradeoff between consumption and saving, choices of
insurance, mortgages and management of debts.
“Robo-advisers have an important role to play
in these other areas as well. They can help provide
understandable rules of thumb for day-to-day
decisions, as well as provide motivation and
reinforcement to individuals.”