The solution utilised by advisers to solve the problem:<\/h2>\n\n\n\n
To solve this problem, FinTech\u2019s have taken the traditional financial advice model and digitised the process by rethinking the way we use technology and creating digital journeys which deliver affordable, compliant single topic advice \u2013 with the option to engage with a human, i.e. the \u2018Hybrid Advice\u2019 option.<\/p>\n\n\n\n
Whilst the digital advice process used varies between providers, a typical advice journey can be undertaken as follows:<\/p>\n\n\n\n
- \n
- Client completes digital fact-find that reviews their situation to determine the most appropriate advice topics for their financial position, and which are also in their best interest.<\/li>\n\n\n\n
- The Fintech\u2019s algorithm and \u2018advice decision making rules\u2019 perform calculations and trade-offs to provide advice recommendations. As digital advice is a rule driven industry, it is the algorithm and not AI that is used to determine the advice recommendations.<\/li>\n\n\n\n
- The process should offer both strategy and product recommendations across; super, investment, insurance, retirement, if possible, as clients need a complete solution. This differs from \u2018robo-advice\u2019 offerings \u2013 which only cover investment advice.<\/li>\n\n\n\n
- Integrations with external providers can be used to pre-populate parts of the fact-find and ensure quality data is captured.<\/li>\n\n\n\n
- As a result, the client can engage in a fully digital experience from start to finish \u2013 including implementation.<\/li>\n<\/ul>\n\n\n\n
The trend to offering \u2018Hybrid Advice\u2019: The game-changing combination of human expertise & digital technology.<\/h3>\n\n\n\n
There is a clear trend for clients to be reassured they are progressing their digital journey as they should \u2013 by having contact with humans. This digital-human or \u2018Hybrid Advice\u2019 model is now the preferred client experience and can be supported by the financial adviser or their support staff.<\/p>\n\n\n\n
The \u2018Hybrid Advice\u2019 model adds a sense of security for clients, which is important given that, for most, it is their first foray into financial advice. Given this, digital platforms should identify clients who may need comprehensive advice and triage them to their respective financial adviser as part of this process.<\/p>\n\n\n\n
Some compliance items to consider in this process include:<\/p>\n\n\n\n
- \n
- Clients should be able to complete all compliance requirements digitally, including KYC \/AML-CTF obligations and letters of engagement.<\/li>\n\n\n\n
- The final item to consider is under whose AFSL is the digital advice being offered \u2013 the digital providers or the advisers.<\/li>\n<\/ul>\n\n\n\n
![\"\"](\"https:\/\/smithink.com\/wp-content\/uploads\/sites\/478\/2024\/11\/MGPS-Chart-1-What-we-mean-by-Digital-Advice--1024x582.png\")
<\/a><\/figure>\n\n\n\nChart 1: What We Mean By Digital Advice<\/strong><\/p>\n\n\n\n
Which client cohort is best suited to use Digital Advice services?<\/h2>\n\n\n\n
The client cohorts ideal to use digital advice are categorised into two key groups:<\/p>\n\n\n\n
Group 1<\/strong><\/h4>\n\n\n\n
Representing clients such as: Millennials, Digitally Savvy, Non-advised, Insurance only, Children of HNW, Employees via corporate super, can access topics to help them establish their financial foundations as early as possible. Financial education services also play a key role in helping clients improve their financial literacy.<\/p>\n\n\n\n
Group 2<\/strong><\/h4>\n\n\n\n
Representing clients who are considering retirement. Advice technology now caters for this group by offering topics covering: Retirement income, TTR and a growing suite of Superannuation topics at affordable prices.<\/p>\n\n\n\n
![\"\"](\"https:\/\/smithink.com\/wp-content\/uploads\/sites\/478\/2024\/11\/Key-Research-Findings-1024x581.png\")
<\/a><\/figure>\n\n\n\nChart 2: Key research findings moneyGPS focus group<\/strong><\/p>\n\n\n\n
How best to integrate a digital advice proposition into a financial planning practice.<\/h2>\n\n\n\n
Key considerations on how to successfully integrate a digital advice solution into a financial planning practice include:<\/p>\n\n\n\n
- \n
- Client segmentation:<\/strong> This service is for the client cohorts already identified in Groups 1 & 2. However, some advisers are adopting the use of the digital fact-finds to establish a picture of a client in a very time efficient and cost-effective way as a starting point for their advice relationship.<\/li>\n\n\n\n
- Services integrations:<\/strong> These will depend on the digital provider and may include \u2013 Open banking and integrations with industry CRM\u2019s.<\/li>\n\n\n\n
- Operational capability:<\/strong> Integrating a digital solution \u2013 including staff training, should have little if any, impact on the business\u2019s operational activities.<\/li>\n\n\n\n
- Marketing:<\/strong> The digital provider may also provide a full service or \u2018turn-key\u2019 offering, including a standard marketing program, to service a specific client group.<\/li>\n\n\n\n
- Referral Partner integrations: <\/strong>One of the key attributes of good tech, is that it allows you to scale your business \u2013 quickly, cost effectively and with improved productivity. Digital advice platforms can be integrated into referral partner businesses \u2013 such as accounting firms or mortgage brokers, providing access to a significant number of client opportunities \u2013 including identifying complex advice needs.<\/li>\n<\/ul>\n\n\n\n
The Digital Advice Solutions ROI<\/h2>\n\n\n\n
Access to digital advice platforms is usually undertaken via a subscription fee (i.e., monthly, or annual) which range from less than $1.0k pm, i.e., in simple terms the cost of approx. 2-3 full SoAs pa.<\/p>\n\n\n\n
The service can be white-labelled, integrate the advisers\u2019 in-house services (i.e. insurance, lending, and full advice), and in some cases, documents can be branded.
Digital providers can also offer single topic advice SoAs for less than $300 per topic, making it a very affordable exercise for the end client and an incredibly positive value proposition for any advice practice.<\/p>\n\n\n\nThe Benefits To An Adviser of Digital Advice Technology<\/h2>\n\n\n\n
Incorporating a digital advice offering into a practice can greatly benefit the advice business in many ways, such as:<\/p>\n\n\n\n
- \n
- Digital advice allows an adviser to more sustainably service clients with; lower balances and simple needs.<\/li>\n\n\n\n
- Advisors can scale their business with little effort or cost to service a market they cannot afford to reach now, giving them more time with existing clients & makes them more money \u2014 by \u2018Stealth\u2019.<\/li>\n\n\n\n
- Establish a \u2018white-label\u2019 branded digital advice platform using the digital provider\u2019s AFSL.<\/li>\n\n\n\n
- Maintain Relationships with Non-advised, orphaned, millennials, employees, individual tax & SME\u2019s \u2014 the adviser’s future HNW clients.<\/li>\n\n\n\n
- Attract new clients: Digitally savvy and children of existing HNW \u2014 the adviser’s future HNW clients.<\/li>\n\n\n\n
- Identify more full-advice clients.<\/li>\n\n\n\n
- Engage referral partners more effectively and with scale.<\/li>\n\n\n\n
- Improve the adviser\u2019s bottom line and overall business value.<\/li>\n<\/ul>\n\n\n\n
Process of advice & why: mirror the experience an individual has with their adviser.<\/h2>\n\n\n\n
The following demonstrates a typical digital experience for a user who needs both personal advice but also to access a range of non-advised financial services such as; lending & finance, estate planning, etc.<\/p>\n\n\n\n
The trend to offering \u2018Hybrid Advice\u2019: The Game Changing combination of Human Expertise & Digital Technology.<\/h2>\n\n\n\n
The critical point is that the financial adviser\/client service member can engage with the user at any step of the digital advice journey \u2013 where access to complex advice matters is warranted or simply to reassure them they are progressing correctly along their digital journey. The user can, if they wish, step back into their digital advice journey at any time. The \u2018Hybrid Advice\u2019 proposition is, therefore, a critical component of any digital offering.<\/p>\n\n\n\n
![\"\"](\"https:\/\/smithink.com\/wp-content\/uploads\/sites\/478\/2024\/11\/Hybrid-advice-user-journey-stage-1-1-1024x581.png\")
<\/a><\/figure>\n\n\n\nChart 3: Example: Hybrid-advice user journey – Stage <\/strong><\/p>\n\n\n\n
![\"\"](\"https:\/\/smithink.com\/wp-content\/uploads\/sites\/478\/2024\/11\/Hybrid-advice-user-journey-stage-2-1024x581.png\")
<\/a><\/figure>\n\n\n\n
- Services integrations:<\/strong> These will depend on the digital provider and may include \u2013 Open banking and integrations with industry CRM\u2019s.<\/li>\n\n\n\n
- Client segmentation:<\/strong> This service is for the client cohorts already identified in Groups 1 & 2. However, some advisers are adopting the use of the digital fact-finds to establish a picture of a client in a very time efficient and cost-effective way as a starting point for their advice relationship.<\/li>\n\n\n\n