For Kelly Power, the last 18 months have been a challenging time for the industry, but now that the Royal Commission’s report is out, it’s time to move forward.
Talk to Kelly Power about the Royal Commission’s recommendations into Misconduct in the Banking, Superannuation and Financial Services Industry, and you’re not left wondering about just how far-reaching these changes will be for the industry.
“The fact is, the Royal Commission has played a very important and necessary role in examining the financial services industry, and we believe it will make the industry better. The Government and Opposition have expressed their collective intent to take action on all 76 of the recommendations,” says Kelly – General Manager Product at Colonial First State.
Kelly says it has also been a long-overdue opportunity to review, reflect and re-adjust processes.
“For us, changes are already underway, which includes implementing stronger policies and processes,” she says. “And this will enable us to improve our products and services.”
Fintech can be a part of the solution
As the industry continues to evolve, Kelly believes fintech (otherwise known as ‘financial technology’) will play a greater role for both providers and advisers.
“The businesses that will succeed over the next 2-5 years will include those that embrace technology,” she says. “And when we look at how we anticipate advisers will be using technology, it will be in three key areas.”
- Client engagement: Kelly identifies client engagement as being the first key area, which includes advisers embracing technology to better support engagement with clients.
“It’s very clear that the expectations of clients are changing. The historic process of a once off review with lots of paperwork is gone. Now it’s all about ongoing client engagement, servicing and regular interactions. Client expectations are now 24/7 and advice businesses need to respond to that,” she says.
But client engagement is not the sole responsibility of advisers. Kelly firmly believes client communication and engagement is just as important to platform businesses, which have a vital role in supporting advisers with the tools for that client engagement.
- Advice efficiency: The second key area identified by Kelly is advice efficiency. And in the future, she says there is no question that compliance will increase for businesses.
“So, in order for providers and advice businesses to manage their increased compliance obligations, they will need to work out how they can use technology to provide better and more efficient solutions to allow them to service their clients more effectively,” she says.
“And when we talk about advice efficiency, I believe managed accounts are a good fit. That’s because managed accounts are an efficiency solution for advisers when it comes to executing their investment advice.”
And the third key area?
- Business management: This key area is all about implementing fintech solutions that can help advice businesses manage everyday tasks, such as marketing, reporting, client communications, and scheduling meetings.
“Collaborative fintech tools are becoming increasingly essential for businesses, and the role of successful platforms will be to augment all these different tools from fintech providers and supply them in an ecosystem for advisers to utilise.
“The end goal is to provide a great user experience that results in quality, safe and affordable advice.”
So, for Kelly, the future of technology for financial services professionals is about finding suitable ways to provide safe, affordable and quality advice, by managing the key areas of: client engagement, advice efficiency and business management.
“Undoubtedly, advice professionals will increasingly need to embrace a whole variety of new technology, like client engagement, reporting and transaction tools. By partnering with platform providers, advisers will be able to tap into these tools, which will assist them to better service the needs of their clients.”
Demand for advice
Looking ahead, Kelly sees a number of opportunities emerging for advisers and advice businesses over the next 2-5 years. First among them is the ongoing demand for advice.
“I have a fundamental view that there is demand for quality advice by Australians and that need for advice will continue. With all the changes we are seeing in superannuation and the retirement incomes space, advice is as important as ever.
“There is a genuine need for people – as they transition to retirement, as well as when they are in retirement – to seek quality advice. So, overarching everything else, that remains a big opportunity for the industry over the next 2-5 years.”
In terms of actual advice processes, Kelly sees a “big opportunity” for advisers to provide more efficient advice, which includes embracing technology to do things more productively.
“I also think there is an opportunity for advisers to use technology to better engage their clients on an ongoing basis. I’ve actually seen some great technology that advisers have designed and implemented within their own practices to do that. And there are plenty of great examples of advisers using entrepreneurs to help them build these client engagement tools.”
However, Kelly concedes that providing more efficient advice is only possible when that efficiency is ensured, which means automating key and repetitive processes.
“I feel that the days of having to rekey and verify data in multiple places will soon end. Instead, we will have an ecosystem where advisers can provide all their information in one place.”
The future of managed accounts
And what of managed accounts?
With Kelly confident about the opportunities available for the industry over the next 2-5 years, she sees a positive role managed accounts will play in helping advisers and their clients take advantage of these opportunities.
“Managed accounts provide compelling benefits to both advisers and their clients,” she says. “And it’s these benefits that are driving the growth of managed accounts.”
Reflecting on the question, Kelly recounts an example.
“There was recent speculation on what was happening with short-term fixed interest and bonds, and which particular cash category they should be. In the past, in order for advisers to implement a change like that and depending on what your view was, it could take six to 12 months. This would require letters to be sent out to clients, authorisations to occur, client review processes – there would be a lot of paper and back-office work involved in that process.
“And before you know it, six months has past and potentially you have lost your opportunity to move, or your view on the bond market may have changed.”
However, Kelly says that is fundamentally different in a managed account, where advisers can respond and execute very quickly to those types of issues in a more efficient way.
“So, I believe the growth in managed accounts is all about the way advisers can help their clients,” she says.
“The technology and solutions around managed accounts provide advisers with the ability to deal with a number of clients simultaneously, while also tailoring investment portfolios to the personal needs of individuals. It’s all about customisation of investments at an individual level that works for clients.”
For Kelly, that means managed accounts will continue to play an important role for advisers in supporting their clients, by providing them with greater efficiency and transparency of investment outcomes.
