Home / Scaled advice is not all robo – people need people

Ross Bowden
The bringing together under the one roof of Superpartners’ scaled financial advice business and the AAS-owned Money Solutions means that big, mostly not-for-profit, super funds will deliver more than 35,000 individual pieces of advice to members this year, rising to more than 50,000 a year in the medium term. More advice will be online but phone conversations are still crucial.
Money Solutions, the oldest and already the largest scaled-advice business, has been providing inexpensive limited and full-service advice since it was started by entrepreneur Virginia Dowd and backed by the precursor to AAS (Australian Administration Services) – then owned by the Kaz systems company – in 1995. Link Group, which now owns AAS and Superpartners, bought Dowd’s half a few years ago and is upgrading its service, especially in the online space.
Ross Bowden, an experienced retail manager with ING who joined Money Solutions as chief executive in 2011, says that Superpartners’ Financial Education and Advice Team (FEAT) delivered about 120,000 pieces of advice over the past 10 years, while Money Solutions did about 130,000. With the combined group and committed ownership he thinks he can now double that rate.
The increasing numbers approaching retirement, the addition of annuities to the product ranges of funds and member-directed investment options are combining to increase demand for advice within funds as well as traditional full-service face-to-face advice through Link offices around the country.
AAS recently announced a deal with Challenger to offer annuities through client funds, following an earlier deal between the two to offer aged care advice, which is a particularly complicated subject.
Money Solutions has 65-70 people working the phones in Sydney, Melbourne and Perth, which now come under the offerings for members of each of the individual client funds. These people mostly have a degree and a diploma of financial planning or an advanced diploma. Some are CFPs.
Bowden says the advice is “tightly scoped” and “largely intra fund”, which is made clear to the member. If the caller wants to know about residential property, for instance, he or she is referred to a full-service planner.
“It proves that there is a real appetite for people to receive relatively simple and straightforward advice about the biggest asset they have apart from their home,” Bowden says. A typical piece of advice, say about investment choice, will involve a 20-minute phone conversation, the production of a Statement of Advice (SOA) and then a follow-up conversation. This will cost about $250 and is paid by the fund. Advice outside the fund is paid for by the member but will usually be able to come out of the member’s account if it passes the Sole Purpose Test.
With the MDIOs, Money Solutions’ clients use either UBS or Macquarie as brokers for direct equities, which are the two main providers – UBS through its arrangement with systems company FNZ and Macquarie through its big retail wrap platform.
Bowden believes online advice will grow rapidly provided it is not “straight-jacketed” from a risk and compliance point of view. “I think there will be an explosion in online advice, mostly around super,” he says. “We will triage them through [to phones if requested]. We will see the integration of the two. That’s what we’re doing now.”
The two integration points are from the ‘contact centre’, from which data is pushed to the ‘advice centre’ and then at the advisor level where he or she can already see what has been done online by the member on the fund’s secure member site, which is usually administered by AAS, as well as ‘pulling’ out more data.
The SOA is stored on the fund site for ongoing access by the member. Bowden says the funds can take the opportunity to push out positive messages to individual members based on the advice. “For example, if the member has an aim to achieve a balance which would give an income of, say, $60,000 a year in retirement, then he can be told of progress towards the goal.”
He is a little wary of the robo-advice offerings which have been popping up in Australia and sees them more as a tool for advisors rather than a substitute, which is a growing feeling among financial planners. “In the US a lot of the advice portals are built around ETFs [such as the one purchased by BlackRock, the largest ETF provider, last month]. Most advice portals I’ve seen in Australia offer advice as a teaser, backed up by a product manufacturer.”
– Greg Bright