Customer eXperience

Perpetual kicks goals with Mainstream SMA

Jacqui Henderson is excited by the role fintech is playing in shaping the future of advice in Australia. She talks to Jayson Forrest about what this future might look like.

Whether you’re ready for it or not, financial technology - otherwise known as fintech - is redefining the way financial advice is provided in this country.

Just ask Jacqui Henderson, the founder and CEO of Advice Intelligence (a.i.) - a cloud-based software platform that is enabling advisers to explore and co-create goals-based financial advice together with their clients - who says the future of advice is fintech.

“There is also genuine demand for advice amongst Australians, however, the stumbling block for many people is the cost and accessibility of financial advice. We need to lower the cost to serve advice, in order to increase scale to meet the unmet advice needs of consumers,” she says. 

Jacqui points to recent research from ASIC (Report 627), which reveals that 41 per cent of Australians intend to get financial advice in the future, supporting findings by Investment Trends in September 2018 that showed 51 per cent of Australians have unmet advice needs.

“Technology is the only enabler that will help the financial services industry to become sustainable in a world where compliance and administration is causing a lot of pain and cost to licensees and advice practices, particularly at a time when the need for advice has never been greater.”

To help address this advice gap, Jacqui believes there is a growth opportunity for businesses to develop sustainable advice models, where advice can be delivered either as a co-creation model, a subscription model or self-service model - via digital technology. 

“Today’s consumer interacts more closely with technology through their smartphone - it’s on demand, convenient, easy to use and it’s visual. However, there is a massive gap between how a consumer interacts on their smartphone and how we deliver financial advice today via an archaic 60 page paper SOA document that a consumer struggles to understand, let alone relate to.”

It’s a view that’s hard to disagree with. 

And with Jacqui’s experience in the private wealth sector, telecommunications and technology industries, she knows a thing or two when it comes to fintech. She has used her combined expertise to create a software platform aimed at improving the way advisers work, while making goals-based advice more accessible to Australians.

“a.i. is essentially a financial planning platform with a unique difference. We transform financial advice into an interactive, engaging experience that is centred around a client’s life goals, which consumers can actively be part of,” she says.

“Our technology is transforming the old-world paper-based financial plan into a live and interactive app that connects a client’s cash flow and investments, and tracks this daily to their life goals,” she says. “That’s the type of customer experience consumers want from financial advice.”

Technology integration

However, Jacqui states that when it comes to building portfolios and risk as part of a managed accounts solution, a.i. is not a portfolio construction offering. Instead, she emphasises it is advice technology (advicetech).

“We provide a framework for licensees and advice practices to integrate their pre-defined portfolios and risk within our customer-facing advice experience,” Jacqui says.

Within a.i.’s goals-based investing methodology, a client’s ‘risk tolerance’ and ‘risk capacity’ is considered via levers that advisers and their clients can dial up and down.

According to Jacqui, risk tolerance determines the client’s behavioural willingness (upside/downside) in order to achieve an individual or bucket of goals, while risk capacity is the client’s ‘financial capital’ and ‘human capital’ – the risk they can afford in order to achieve their goals.

“The future integration of ‘advicetech’ and ‘investech’ will provide a seamless end-to-end experience for both advisers and consumers,” Jacqui adds.

Goals-based advice

But what is goals-based advice and what does it really mean to the everyday adviser?

“It’s a good question,” says Jacqui. “Goals-based advice isn’t exactly a new phrase, however, it addresses an issue that’s been around for a long time – namely, how can advisers link their clients’ life goals directly to advice strategies and their investment portfolios, and then track that to their own goal outcomes?

“So, goals-based advice is designed to make the financial advice experience more engaging, relevant and meaningful to consumers. It centres the advice conversation around their goals. It helps a client to articulate what their goals are and structures their financial plan around these.”

However, she concedes the main problem the industry has faced, up until now, with goals-based advice has been the lack of suitable financial planning technology that makes goals-based advice an easy and interactive process for advisers and consumers. 

“This is particularly essential from a regulatory stance,” Jacqui adds, referring to one of the main findings from the Hayne Royal Commission that found licensees could not directly link their advice back to their clients’ goals and objectives.

So, when talking about goals-based advice, Jacqui likes to explain it as consisting of three distinct parts:

1. Goals discovery

Goals discovery focuses on goal exploration and goal setting with the client. According to Jacqui, about 70 per cent of consumers don’t know their goals, so advisers need access to the right tools that can help their clients discover what’s important to them throughout each stage of their life journey.

2. Goals modelling and tracking

Goals modelling and tracking ensures a client’s assets and income will meet their changing life goals, life events and expenses over time. This type of modelling is unique, as it is multi-dimensional, meaning advisers can perform modelling as part of a live, client-facing experience, which has now been made possible through advancements in technology.

“Advisers can create future scenarios. These can be combinations of advice strategies, stress tests (such as an economic or life event) and goal ‘trade offs’. It essentially simulates the various approaches a client can take, in line with their goal target, which is fundamentally transforming financial planning into something that is more ‘real-time’ and relatable,” Jacqui says.

“Clients are then able to play an active role when making important decisions that impact their futures. Once modelling is complete, by using technology like a.i., advisers can click to create an instant, digital SOA, based on recommendations made, as a joint responsibility and co-creation experience. It ticks all the compliance aspects because the adviser-client conversation was captured within the scenarios that were explored.”

3. Goal achievability

At the heart of goals-based investing is the ability for clients to focus on their ‘goal achievability’, which does not necessarily mean outperforming the market by a percentage or benchmark. 

“Instead, clients can use single or multiple investments, assets, cash flows and debt to fund individual or multiple goals. It uses key levers including, goal priority, time horizon, funding source, risk and strategies to maximise a client’s chances of success, in relation to their goal achievability,” says Jacqui.

The future

So, by enhancing the overall client experience in the financial planning process, does that mean goals-based advice is the future in the delivery of advice?

It’s a question Jacqui answers with her trademark enthusiasm.

“Absolutely, it’s the future,” she says. “Why? Because goals are meaningful and tangible to consumers. A person saying, ‘I beat the market by 5 per cent’, doesn’t really mean anything to them. 

“Whereas, a person saying, ‘I have a lovely house, my kids went to a great school, and I have saved and invested enough to enjoy a comfortable retirement’, means so much more to people. It’s something they can easily relate to.”

And Jacqui is quick to add that ASIC is also in favour of goals-based advice, as RG175 clearly states that advice must combine a client’s objectives, current situation and future needs.

When it comes to advisers and practices using technology, Jacqui ardently believes that ‘Customer eXperience’ (CX) will be the key to doing this. At the heart of this will be goals-based advice technology, which will enable a much better CX in line with increasing consumer expectations.

“We will see a future where competitive advantage will be based on the Customer eXperience you deliver. Delighting, engaging and inspiring consumers is a big growth opportunity for the advice sector,” she says. “And it’s something to be genuinely excited about.

“Just as Netflix redefined TV, by allowing consumers to curate their own content, and Uber delivered a superior ride-sharing customer experience, so too can goals-based advice technology help enable consumers to better organise their own financial life with their adviser – in a way that is meaningful to them, through their own unique goals and life aspirations.” 

Jacqui firmly believes that by accelerating the transformation of digital advice through this human-centric lens, advisers will be able to truly enhance the overall client experience.

“Australians are becoming increasingly tech savvy, so if advice businesses are to survive and thrive in the future, they need to provide the type of client experience that more Australians are now demanding.”

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