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The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
Mercer’s robo deal with Decimal and the ‘free’ trend
Ana-Marie Lockyer
In a cautionary tale of potential users of robo-advice websites and services, current bank customers are prepared to pay an average of only $53.50 for an online personal financial plan. And a significant proportion expect to pay nothing, according to a bank’s survey of its customers.
The ANZ Bank survey, published last week, was of 750 of its New Zealand customers, ahead of the proposed financial advice law reforms there, which are currently restrictive of robo advice.
While a number of robo-advice offerings have been rolled out in Australia over the last year, including the ASX-listed Decimal Software, New Zealand providers are awaiting the introduction of proposed financial advisory law reforms before jumping on the bandwagon.
In submissions on the Financial Advisers Act (FAA) draft review last year, all of New Zealand’s major banks supported the easing of current restrictions on robo-advice. The ANZ survey showed almost half of its customers would consider using an automated financial advice service.
The survey found 46 per cent of respondents would “definitely” use robo-advice services, “particularly if they are free”. Only 15 per cent of those surveyed said they would want a traditional financial plan in the future and only 3 per cent were willing to pay for one.
Ana-Marie Lockyer ANZ Wealth head of products, said the survey showed respondents were willing to fork out an average NZ$57.00 (A$53.50) for a personalised financial plan but a significant proportion expected to pay nothing for the service.
“Given it takes time to build a full picture of an individual’s personal circumstances, we need to find ways to get quality information and financial advice to customers, at a price they’re prepared to pay,” Lockyer said in the ANZ release.
Mercer Australia inked a deal with Decimal Software late in December to create a “consumer-driven robo-advice” service.
In an announcement to the ASX, Decimal said the deal extended an earlier agreement with Mercer to provide “adviser driven robo-advice”.
Decimal had accrued more than A$1.2 billion in funds under advice since launching its direct-to-consumer robo-advice platform last June, the ASX statement says.
Nic Pollock, Decimal chief executive, said the Mercer deal was a “fantastic validation” of the company’s robo-advice technology.
“We believe that Decimal is currently the only company with the capability to provide consumer driven robo-advice to customers quickly and efficiently,” Pollock said.
Decimal was founded in 2008 by Jan Kolbusz, one of the early builders of Asgard, the seminal Australian investment platform now owned by Westpac. Kolbusz continues as Decimal executive director.
Mercer could adapt its recently-launched Australian ‘robo-advice’ service for the New Zealand market, according to a spokesperson for the group.
The Mercer spokesperson said the Marsh & McLennan-owned firm has yet to formally review the potential application of its new auto-advice service in NZ but launching across the Tasman would be feasible.
“We’ve established the system we need for the superannuation environment in Australia and will continue to explore what is required and would benefit customers in NZ,” the Mercer spokesperson said.
– David Chaplin, Investment News NZ, with Greg Bright
