Can technology help advisers service the masses?

Financial advisers who choose to serve the masses instead of specialising must reckon with how to leverage technology to make this possible amidst the influx of wealth Australians do not know how to plan for, according to industry experts.

A panel of experts from different branches of financial advice at the intelliflo roundtable yesterday agree that Australia's booming wealth is an opportunity the advice profession can get in front of.

Adviser Ratings managing director Angus Woods said Australia's wealth has grown significantly over the last 10 years on the back of the 'Great Australian Dream' and growth in property prices.

There are currently about 15,500 retail advisers some 2500 wholesale advisers who govern between 45% to 50% of this wealth, he said.

"The wholesale adviser market as grown by virtue of the regulation that played out in terms of making sure that advisers are quarantined in their ability to deliver advice in a compliant way. In that respect, compliance has overplayed its hand from a government regulatory perspective," he said.

This outcome mirrors that of the UK government's Retail Distribution Review (RDR), which has been blamed for worsening the advice gap.

"What that did was force a lot of retail advisers into the wholesale landscape, which caused an absence or an opaqueness of how these advisers are actually advising the end client," he added.

intelliflo chief executive Nick Eatock said Australia and the UK are very similar in terms of the number of potential clients per adviser with the ratio in the UK being 2000 to one. Here, it's about 1800 to one.

"If we think that advice is valuable and can deliver great outcomes for people, which I firmly believe in, having those kinds of ratios just doesn't work if you have to have a very face-to-face relationship-based traditional advice model," he said.

"That's really where we see technology as part of the solution - it's not the full solution, but part of the solution to actually enabling advisers to deliver more advice to more people."

Clayton Daniel, the chief executive of ensombl, said most advisers will eventually have to choose between serving high net worths or the mass market.

Daniel predicts that serving the masses can successfully be done even under the existing regulations, using one advice firm he works with that employs three advisers and 4000 clients, as an example.

If regulations change, Daniel thinks this can potentially lead the way to more advisers servicing the masses.

"The only question is whether you can do both at the same time? Because it's definitely going to happen. So, you're either going to be a high-net-worth or a scaled adviser. I think the difficulty will be in doing both in terms of adoption of technology and change management within practices [and so forth]," he said.

The big challenge to platforms such as CFS, HUB24, Netwealth, North and so forth, he predicts, is not competition or the threat of a new platform.

"It will be scaled advisers. I think that the huge opportunity is for financial planners to take that market, if you look maybe 10 to 20 years into the future," Daniel said.