“A digital advice platform asks information about where you’re at financially, and then Otivo can help them decide what they should do next. The experience will be different for each person,” Feeney says.
Otivo allows users to log in and change information to see different financial scenarios appear immediately on the screen. “The best financial plan you can have is a living plan, because lives are complicated and always changing,” Feeney says.
Otivo chief executive Paul Feeney: “The best financial plan you can have is a living plan”.
“The world of financial advice is complicated and even intimidating. Every single piece of personal financial advice provided by advisers is digitally generated anyway. How that advice is then delivered to the consumer is what changes the cost for consumers.”
Regulatory changes have allowed superannuation funds to dish out basic financial advice. A number of funds have been developing frameworks to offer their members advice and guidance based on their age and wealth accumulation stage via digital tools.
Super funds have also been in talks with Feeney about how to bolt on Otivo after regulatory changes announced by the federal government also allow super funds to offer financial advice.
“With a face-to-face adviser, you’ve got to pay for their time, but with a digital advice platform, you can get advice on the same areas of your life, but you do the legwork by putting the advice in to the platform, rather than the adviser doing it for you,” Feeney says.
He insists that Otivo doesn’t compete with advisers. “We’re opening up advice to more Australians, because we fundamentally know that when people get advice, they’re better off,” he says.
Other digital financial advice platforms include share trading app Pearler, Naked Wealth, MoneyGPS and Stockspot. Investment apps such as Raiz may also offer in time given regulations have softened to ensure all Australians can access affordable financial advice.
Meanwhile, young financial advisers are also experimenting with delivering financial advice via apps and AI solutions. Other advisers are dishing out advice on platforms like TikTok and Snapchat in the hope of luring new clients.
Cost crunch
As 4.2 million Australians approach retirement and realise they need affordable financial advice, Adviser Ratings research shows many aren’t willing to fork out the average cost of $3960 it costs for financial advice.
Over the past five years, advice fees have risen by 58 per cent due to a continuing shortage of qualified financial planners.
Adviser Ratings chief executive Angus Woods says the new breed of apps focused on younger generations are starting to get cut-through in the financial advice market.
“Australians are increasingly taking financial advice either from advisers or AI bot solutions with guardrails in place to ensure that AI isn’t giving off bad advice that doesn’t fall foul of the legislation. Some of these platforms and apps have only started offering general financial advice in the last year or so,” he says.
While he wasn’t concerned about financial advice being delivered via social media, it’s not easy for regulators to govern the space and keep the cowboys out. He says scalable technology is the key to making money in the financial advice space.
“Traditional advice firms are relying on legacy technologies and their data platforms don’t talk to each other, making the advice experience clunky,” he says.
But digital financial advice platforms have a lot to overcome. Australians lose more than $1 billion in investment scams per year, making it difficult for some to trust a platform.
At the same time, a number of financial advisers are permanently banned and disqualified every year for mishandling their clients’ money.
So how do consumers know who to trust? Woods says make sure you only take financial advice from a properly qualified adviser listed on the financial advice register.
“At the end of the day, just remember that there’s no shortcut out there to help you become a successful commercial developer, a millionaire or a crypto bro,” Woods says.