MEDIA RELEASE: While some of Michelle Levy’s recommendations to the Federal Government’s Quality of Advice Review (QAR) have been contentious, advisers shouldn’t lose sight of the fact the proposals won’t result in wholesale changes to the way qualified, professional financial advisers already operate, said Padua Solutions co-CEO and co-founder, Anne-Marie Esler.

“The benefits of financial advice, its cost and its value will still need to be articulated, and many elements of the advice process will remain the same.

“However, it’s an opportunity for technology and fintech providers to play a greater role in streamlining the service and advice that advisers provide.

“The list of advice elements remaining the same is a long one. Well documented research and strategies will still be required, as well as the ability to access quality product research. Client goals and objectives will still need to be understood and the scope of advice will need to be bedded down and agreed to prior to delivering the advice,” she said.

Ms Esler said there will also be the same requirement to disclose fees and remuneration, and conflicts will need to be managed or avoided.

“Fee paying clients will still expect a documented financial plan, and this will almost certainly contain many of the elements that are in an existing Statement of Advice (SOA). Advisers need to remember one of the key issues with client mistrust is engagement; if advisers aren't providing an SOA, it means a key means of communication that assists with engagement - and therefore trust - disappears.

“Highlighting the value of advice is key, and this requires financial planners evidencing the strategic benefits of their advice, the cost of the advice to the client, and the value that remains thereafter.

“Licensees will still expect good processes and standards to be met in a manner that can be evidenced, and professional indemnity insurers will also expect strong governance.

“Of course, ongoing continuing professional development requirements will also still need to be met,” she said.

Ms Esler said the QAR proposals will intensify competition if the proposal to allow product providers to give scaled advice to clients is implemented. However, she believes this will help drive much-needed innovation from fintech providers, and will promote the provision of quicker, lower-cost advice.

“The improvements to financial technology will reduce the time it takes to produce advice – which can take up to 30 hours for a complex SOA - and this will reduce the costs involved,” she said.

Ms Esler said it is no surprise SOAs are so time consuming, as Padua Solutions has identified over 1000 separate advice strategies.

“Despite this, the right technology can streamline this process. It can take the universe of over 1000 available strategies and filter those available to the client based on their specific circumstances.

“The technology can then calculate the benefit and cost of each of the available strategies, and determine the one which provides the greatest value.

“With software focused on supporting strategy development, and tools that allow advisers to see what options are available, they can provide more in-depth and varied recommendations in a fraction of the time it would have taken otherwise,” she said.