Ignition Wealth started out by offering a technology service to pension funds 10 years ago, but realised that it was easy to adapt its technology for the retail finance sector because it could open up the advice process to many more people.
Mr Fordree said: “In Australia, they were turning away six or seven people a week with A$200,000 of investment. Advisers weren’t allowed to talk to anyone with less than half a million.”
The typical advice process starts at A$5,000, In Australia, which means that only around 15 per cent of the adult population receives financial advice. The cost of Ignition Wealth's digital advice service is a fifth of that, which makes advice available to around a further 15 per cent of the population.
A big driver of digital advice is the increasing popularity of passive investing. Ignition Wealth’s current offering directs clients to different ranges of exhange-traded funds. Under Ignition's own licence, a new iteration of the software will direct people to active funds, or if it is under the adviser's own licence, then it can be plugged into his portfolio options.
Mr Fordree noted: “The big driver globally is that more than 50 per cent of active funds in Australia are underperforming passive funds, so the hot money is going towards digital advice and passive funds. We’re seeing a very strong trend towards low cost.”
This is why Vanguard and BlackRock have made such a strong foray into the digital advice sector, he explained, because low-cost passives and automated advice go hand-in-hand.
Ignition offers a B2B service exclusively, dealing with ‘licenced’ financial advisers in Australia and ‘unlicenced’ professionals, such as accountants, who want to be able to offer some kind of add-on service to their clients. Business customers of Ignition white-label the service and are charged a wholesale price by the company.
Ignition is majority-owned by the staff and management, and it would be safe to assume that it would be on the radar of the likes of BlackRock, which has made many aggressive forays into the automated advice sector.
He said: “Our view is that if you look forward three to five years, every advice journey will have a robo component. Every advice business is going to have to build this kind of partnership.”
Melanie Tringham is features editor of Financial Adviser
Mark Fordree's career ladder
2014 to present Chief executive, Ignition Wealth
2007 – present Director, Nunyara Rural Holdings
2009 – 2010 Managing director, Fermiscan Holdings Ltd
2000 – 2008 Founder and chief executive of EG Capital
1995 – 1998 Executive director, ANZ Securities
1993 – 1995 Executive director, ABN Amro