In technology, 18 months is a generation of time (look up Moore’s law). Hence we can write this post as a three generation veteran of low-cost advice (for non-geeks, that is since 2007!).
Over that time we know that:
- advisers only target the top 20%
- 80% of the market are without financial advice
- banks are scared of anything that might conflict with their commission-based adviser channel (well, up to now at least!)
- advisers hate low cost advice cause it’s not as lucrative
- low cost advice HAS to involve some form of web-enablement to keep a lid on provision costs
- more consumers are online but wary of hidden costs of online services
- we’re getting older (sad, but true) and there’s not enough superannuation nor pensions to support the rising numbers of elder Australians
- lack of affordable financial advice is seen as the precedent to a lack of superannuation for the 80% mass market
- if the market (banks, financial institutions and advisers) won’t embrace low-cost advice of their own volition, the government (Labor or Liberal) will regulate it to be so – they don’t have any other choice.
Enter the announcement on Monday for ‘no commissions’ financial advice and huge channel disruption.
It’s a watershed moment – those who can embrace it and start re-inventing their business model to low cost advice will be riding the crest of the wave.
Fact is you could have low-cost advice on your website tomorrow but for many that’s too much of a leap (and we say that after three generations of market discussions). But you need to get your feet wet now not only to slowly introduce the new model to existing business but to also educate your customers and prospects of the transparency, value and convenience of online interactions around financial advice.
This kind of regulation isn’t going to go away. How are you going to structure your next two years? Riding the crest or getting dumped and churned in the waves?
