Can digital advice help address any of the barriers to getting advice?

Question: Can digital advice help address any of the barriers to getting advice?

Answer: Yes, absolutely.

There are many barriers experienced by people who need or want financial advice. We’ve identified a few of these, and categorised them under five Cs. We also explore how digital advice helps address each C.

What are the 5 Cs?

Cost: The average cost of accessing holistic advice from a financial adviser today is around $3,500 a year, and can go as high as $5,000 or more for a comprehensive financial plan. This is far beyond the $500 that research shows most consumers are willing to spend.

Complexity: Many people may believe they do not have a high enough level of investible assets, income, or financial complexity to justify seeking financial advice. This belief can be reinforced by advisers’ setting minimum levels of investible assets to access their services.

Compliance: Technology is enabling access to advice at a scale not seen before. This comes with an ability to improve compliance outcomes in parallel, by ensuring complete data gathering, consistent recommendations and experience, and guardrails which limit the scope for idiosyncratic behaviours and conduct risk.?

Confidence: Few consumers understand advice terminology and most just want “help”, often from their financial institution.?Many lack the confidence to engage with traditional advice channels, and can be reluctant to share their financial situation.?

Convenience: Obtaining traditional advice can be a time-consuming process, usually involving multiple meetings, often only available during the traditional business hours of 9am-5pm, Monday to Friday. If people can’t access the type of advice they want, in a way and at a time that suits them, the chances are high that they simply won’t access it all.

How can digital advice help address each of these barriers?

Firstly, the barriers of cost, confidence, and convenience heavily relate to accessibility of financial advice. Digital advice removes these barriers by making advice affordable and easy to access, not only in time and location, but also in terms of privacy for those with money sensitivities.

With digital advice, financial institutions can reach more customers in a fast, economic, and scalable way, significantly reducing the cost of delivering that advice, while customers can access advice online at a time and place that suits them. Digital channels allow the customer to experiment with the experience in private, and to engage with advice without feeling self-conscious about their situation.?

For customers where complexity is the barrier because they have smaller amounts to invest or simpler advice needs, digital advice is perfectly suited to delivering single issue personal advice. Getting advice on superannuation investment options, contributions, investing outside of super, or taking up insurance for a specific life event or phase is all easily achieved through digital advice.

Finally, financial institutions can be confident that the adoption of digital advice results in consistent and quality advice outcomes for consumers. CEOs can sleep better at night knowing that digital advice helps deliver better compliance outcomes and fewer conduct issues.

Ignition’s digital algorithms build-in all regulatory requirements, together with an advice provider’s business rules, ensuring any advice provided reflects the institution’s advice philosophy, with limited scope for individual deviations. The platform also collects and automatically checks all required data for anomalies and conflicts, so nothing slips through the cracks. This also ensures that anyone with more complex needs, or for whom digital advice journey?is not suitable, is efficiently triaged out.

Digital advice can solve many of today’s barriers to obtaining financial advice by lowering cost, reducing complexity, supporting compliance, increasing confidence and offering convenience to ultimately put the consumer in control.?

To read more from our submission to the Quality of Advice Review, download our Insights from our Submission paper.