Consumer trust isn’t something to be taken for granted, but reports from the UK, US and here at home are all pointing towards an uplift in trust levels around financial advice, which can only be a welcome development.
There are significant tailwinds behind the financial advice industry at the moment, but some major obstacles are still preventing advice practices from taking advantage of surging demand according to a new study from CFS.
Industry innovates on advice access models while Govt dithers on reform
In December it will be two years since the government received Michelle Levy’s set of 22 recommendations stemming from the Quality of Advice Review, and all the industry has to show for it are minor tweaks to the advice administration process. “Quick wins”, the financial services minister called them.
While Treasury remains stalled on drafts for the second, more meaningful tranche of reforms, which will pare back SOAs and introduce a new class of advice, the industry has started coming up with its own solutions.
This week Colonial First State and Viridian Financial Group announced an agreement for Viridian to provide relatively affordable units of one-off, topic-based financial advice to CFS FirstChoice superannuation, pension and investment members.
CFS FirstChoice customers will be able to access a Viridian adviser in “modular blocks” which start at $500 each, with eligible topics including personal investments, superannuation, pensions, retirement planning and Centrelink. More complex and specialised topics like aged care and UK pension advice will be excluded. Any combinations of blocks with be capped at $3,000.
The move is part of a multi-faceted effort by CFS to give its members greater options to access financial advice. It already has a collaboration with digital advice provider Otivo for basic services, and a ‘Find an Adviser’ tool on its website to help customers find a specialised or holistic adviser for more comprehensive advice needs.
The new tie-up with Viridian would essentially sit between those service offerings, giving CFS customers another access point to a modicum of advice.
“The reality is that we have a large member base that cannot afford comprehensive advice,” said CFS superannuation chief executive Kelly Power (pictured, right). “By introducing this new model, we are enabling our members to access affordable advice suited to their specific needs at a particular point in time.”
Operational efficiency
According to Viridian’s general manager of advice Brett Arnol (pictured, left), CFS customers will book a meeting with a Viridian adviser directly via the CFS call centre, sign a privacy statement to allow the sharing of their relevant information between CFS and Viridian and complete a fact find.
“The client can then go into the discussion with the adviser with an open mind in terms of which blocks they wish to focus on,” Arnol (pictured) tells The Inside Adviser.”
What makes the deal efficient and scalable from Viridian’s perspective, he explained, is its use of the available technology.
“It’s then a normal, episodic advice meeting with the exception that it’s 100 per cent digitally recorded and we run artificial intelligence over it so it speeds up the next step to help us produce an SOA from there,” he explained. “Implementation fees are rarely included, the block fee is for the advice and the SOA, not the implementation – but we can facilitate that separately if requested.”
The client will typically come through to Viridian on the back of a CFS superannuation or investment product, he said, but Viridian’s advice is product agnostic and does not exclude other providers.
Aside from being scaled and technology driven, Arnol says the service is also facilitated by Viridian’s strong pipeline of young advisers keen to use it as an access point to advice provision. The group has had ten people complete the program in the last two years and has another eight currently in the program.
“It’s not only the digital engagement which adds efficiency,” he says. “We’ve spent four years developing our professional year program and we want to make sure the advisers are ready and understand the real client experience. They’re fully qualified advisers already but this gives them more of that experience.”
The acid test
The partnership between CFS and Viridian is emblematic of an industry that’s now starting to bring its own solutions to the advice access and affordability issues addressed in the original Levy review.
Superannuation providers, prompted by the Retirement Income Covenant’s directive to provide decumulation guidance to members, are slowly becoming more instructive on the general advice side. Funds like EquipSuper, AwareSuper, TelstraSuper and CSC all have reasonably developed services.
While superannuation funds typically have either internal providers or referral agreements for personal advice, however, the Viridian/CFS partnership brings together several elements to create the kind of scaled personal advice more people can afford.
Its acid test will be when the second tranche of advice reform comes, and institutions start providing their own version of stripped-back, personal advice. According to Arnol the other reforms in the second tranche, including the scheduled changes to SOA arrangements, will only make the Viridian offer more efficient.
“When the reforms come out, the research and documentation part might be even easier,” he says.
