FinTech & Digitally Enabled Advice (Seminar 4)

Question 1

Name 5 topics that a consumer can learn about on the MoneySmart website.

Answer 1

• Managing your money
• Borrowing and credit
• Insurance
• Superannuation & retirement
• Investing
• Life events & you

Question 2

Identify 3 FinTech / Robo-Advice providers that offer financial advice and investment management services for Australian consumers. Familiarise yourself with the service they offer, and describe their ‘value proposition’.

Answer 2

The FinTech industry is growing rapidly in Australia and worldwide. Example providers include:
• raizinvest.com.au – automated savings via mobile app, combined with investment management (ETF)
• clover.com.au – online investment manager (ETF)
• stockspot.com.au – online investment manager (ETF)
• sixpark.com.au – online investment manager (ETF) with SMSF capabilities
• brickx.com.su – residential property investment platform
• mapmyplan.com.au – goals-based financial planning / education resource
• movo.com.au – hybrid provider which combines online portal with human
advisers

Question 3

Contrast the characteristics of ‘typical’ robo-advice versus full-service advice clients

Answer 3

Typical ‘robo-advice’ client:
• Simpler investment needs, fewer assets
• Comfortable with basic, generic advice
• Younger (under 35)
• Often previously self-directed
• Wants low(est) cost
• Values: independence
Typical full-service advice client:
• More complex needs, requires customized planning
• Wants ability to consult with advisor as needed
• Market turmoil, personal financial stress
• Trusts and feels understood by advisor
• Recognizes the benefit of ongoing behavioural and investment guidance
Values:
• Independence: appreciate a collaborative partnership with advisor. (Gens X/Y)
• Authority: appreciate advisor’s direction and expertise. (Baby boomers and older)

Question 4

Outline three potential benefits of virtual advising.

Answer 4

• Saves you and your clients time: shorter, more productive meetings and no commute time
• Work with the right clients, not just those closest to you: with virtual advising, you’ll no longer be limited to working with clients in your immediate geographic area. Because of this, you can focus more on your niche market. This benefits clients too because they can work with the advisor that is right for them, instead of the one closest to them.
• Lower costs: for those going completely

Question 5

Many successful advisors incorporate virtual planning into their practices to support their needs and the needs of their clients, without transitioning to 100% virtual advising. Discuss some of the ‘hybrid’ options you can take advantage of as an advisor who works virtually full or part time:

Answer 5

Renting part-time office space
• Advisors looking for a more traditional meeting space might find a space they can pay for on an as needed basis, instead of locking themselves into a fulltime office space.
Meeting in public spaces, adviser’s or client’s home Some things to keep in mind include:
• Public spaces: Locating a quiet space, concerns with privacy
• Adviser’s home: housing layout, more efficient for adviser
• Client’s home: Offers intimate perspective, more efficient for clients
Tailored approach based on needs and preferences of individual clients
• For advisers who wish to maintain a traditional office to work from and meet with clients in, virtual advising could be integrated into a tailored approach which allows advisers to accommodate the communication preferences of a range of clientele

Question 6

Why would a financial adviser want to go virtual? How would you expect the client- advisor relationship to change from going virtual? How can clients gain from this change?

Answer 6

Do you enjoy the idea of not having to maintain a physical office space? Or perhaps it’s the ability to work from anywhere, even when travelling. Or maybe you want to expand your client pool beyond those in your immediate geographic area?
If you plan to replace regular in-person meetings with a virtual relationship, you should anticipate other changes. For example, you may have to send regular updates via email. The absence of in-person interaction should be replaced with increased digital interaction.
When deciding to go virtual it’s essential to consider your client’s satisfaction. Whether its access to the most up-to-date information via a client portal, increased accessibility to their advisor, or more meeting flexibility, your clients should benefit too.