While our shores have savers only just starting to get engaged as a result of pension freedom and financial advisers bemoaning how little they receive when they sell up, down under advice is thriving and expanding.
Last week one of Australia’s biggest banks announced big plans for robo-advice and it surely has to raise questions as to why UK counterparts are seemingly unable to follow this lead.
In Australia, regulatory requirements introduced over the last year by its government mean various providers have had to pull together data so that savers can see a single screen statement listing the size of their pension pots, investments and mortgage commitments.
Far from making advice irrelevant, when people see how much cash they have got, the experience so far is when savers down under realise the true value of employing an individual to suggest ways to boost that pot further.
As a result of this increased engagement and demand for assistance, earlier this month the National Australia Bank announced plans to provide computer-generated financial advice to consumers through its online banking platform.
In a move it hopes will prompt more customers to contact its adviser network, the bank will this month launch an online platform that produces free, general advice on retirement savings and insurance.
The service will initially be rolled out to 40,000 customers but there are plans to increase this to 400,000 within a year and, eventually, offer the service to all three million of NAB’s online banking customers.
The Australians have a government that encourages them to engage with clients in the way they want to be engaged with todayHow is the Australian banking giant able to do this?
The bank says the advice will be “personalised” but under the law it will be classified as “general” advice, meaning it does not take into account a customer’s entire financial situation.
Unlike our banks, who shifted away from advice in the run-up to the Retail Distribution Review requirements coming into force, their Australian counterpart is clearly confident in their relationship with regulation.
The Australians have a government that encourages them to engage with clients in the way they want to be engaged with today.
My parents are off to see their financial adviser today – my father’s bad back will no doubt be made worse by the sheer volume of paperwork he has to leave this appointment with.
The client should be at the heart of everything financial advisers and providers do, according to the FCA, and yet the regulator has created a world where you have to hand out masses of paperwork to consumers increasingly used to shopping online.
Anyone who faces consumers can see how their interest plummets when they are handed reams and reams of paper, with endless caveats stating “Past performance is no indication of future returns.”
My mother, a former IT lecturer at a college, informs me while she understands what the adviser tells her in plain and simple English about what is going on with their investment portfolio the paperwork makes her head spin.
She says: “You just keep getting more of it and filing it away without even reading it. They [statements listing units, shares, etc] come every few months and all I do is check the money hasn’t disappeared.”
If the UK regulator and government wants to protect consumers instead of burying them in paperwork then they need to create a regime that engages and encourages them to care and take action to bolster their finances.
Encouragingly a couple of recent reports from the FCA show they do understand what a ‘turn off’ a mountain of paperwork is and that consumers want to be engaged with in a different way.
Providers and advisers have been asked how warnings could be changed to reflect the fact consumers prefer online.
At James Hay’s annual conference yesterday (17 September), Robert DeDominicis, chief executive of platform engine GBST Wealth Management Limited, said SuperStream reforms in Australia in the last 12 months have allowed pension transfers at the click of a button.
When asked would the FCA, which requires those wishing to undertake DB transfers to receive advice, would ever back a similar system in the UK, Mr DeDominicis said “It is a self-directed mechanism. I can’t see why not.”
Regulation in the UK needs to recognise people prefer to deal with issues online – time is too precious to sift through masses of paperwork.
We need rules that allow advisers to confidently conduct meetings over the likes of SKYPE and deliver succinct messages about the state of a client’s finances in a video format.
You know what your clients want. We just now need regulation that makes you confidently able to deliver it to a generation that knows what LOL means but is clueless about what APR stands for.
emma.hughes@ft.com
