Trusted advice needed, investors kept at bay

In a media presentation yesterday, Deloitte partners outlined their views on why there is a big opportunity for the advice industry as a whole - if only the financial advice industry could resolve the mismatch between demand for trusted advice and supply.

 Citing research showing that very few Australians have a financial plan, Deloitte suggested this was one area ripe for further work by both incumbents and disruptive newcomers to the industry with different business models and different value propositions.

 The firm's wealth management team have spent the best part of a year researching the likely directions that financial advice will take. Drawing on good and bad practice from around the world to come up with a view on what it might look like, they suggest the industry could become reliant on technological answers such as scalable "robo-advice."

 "It would be too easy to look at the financial advice industry today, and be pessimistic about its future," said Phil Hardy, a financial services leader at Deloitte, and one of the report's key authors. "As the demand for trusted advice grows, confidence in the supply of trusted advisers has waned."

 Hardy said that the regulatory framework has forced the industry to consider the current situation - but it did so in order to create a better future. And it is in this context his team developed the Deloitte report - to look at what that future of advice might look like, based on what is known today.

 "There is, and will continue to be, a critical role for effective regulators to oversee the industry. But its future will be dependent on stakeholders adopting more customer-centric business processes.

 "The changes ahead are as exciting as they appear daunting," Hardy said.

 He also noted that financial products were complex and not necessarily easily understood by the average consumer.
 Co-author and Deloitte assurance and advisory partner elect, Andy Abeya, said that the report, "In The "Advice Based World", provided "a working hypothesis of a future for the financial advice industry.

"We start by examining the growing demand for advice and consider nine levers that we believe will meet Australians' needs for the right advice, at the right time and in the right context," Abeya said.

 "Some of these trends are already being seen in small pockets of the industry both here and internationally, which in some respects, signals that the future is already here."

And some financial advisers in Australia are already trying to stand out from the crowd. For instance, BT's clients are able to comment on and rate their advisers, the Deloitte partners noted.