$88 Advice?
Welcome to the future.
Financial providers are releasing new advice offerings in response to the first tranche of the Delivering Better Financial Outcomes legislation.
An annual $88 will give Colonial First State (sorry, firewalled) superannuation members access to advice.
The algorithms driving this app consider a member’s goals, financial balances, risk tolerances, and circumstances. It also interrogates thousands of queries from years of telephone conversations with members before proffering tailored recommendations.
It will be intriguing to see if the thousands of “…your call is important to us” recordings skew the recommendations to ‘please hold.’
Good luck with that Colonial First State.
As is already evident, the development and moderation strategies for these apps seem to be less driven by technology and more by the distribution promises made by the app makers to their ROI-seeking stakeholders.
POWER
The power in the advice market is shifting again.
Having lost the battle with industry funds thanks to the death knell delivered by the 2018 Royal Commission, not one of Australia’s financial institutions could trust their aligned advice models anymore.
They all exited their aligned advice models which has created the biggest frenzy of client base bull/sell activity driven by every small business owner’s dream of ‘bigger is better’. I haven’t witnessed such activity since the heady days of amalgamators like Stockfords and Kevin White’s Investor Group – those with long memories remember how well that era ended.
The suits within financial institutions watching the amalgamation games from product-funded boardrooms are gaining new confidence that their AI-based advice business models will not only provide Waze-like guidance for the millions of homes, families, and businesses that couldn’t afford their old aligned advice models but also hope to rebuild their social license in the process.
It almost seems like their new offerings mean we can trust them for advice again.
This is much more than Video-ezy or Blockbuster rebranding as Netflix.
The heart of many financial advice issues is actually the word ‘advice’.
‘Advice’ is a powerful word.
More powerful than, say, a word like ‘product’.
‘Advice’ is a better positioning word, better marketing, better proposition, and better elevator pitch filler than, say, ‘product’.
‘Can I help with some product?’ isn’t as appealing as ‘We can advise you on that’.
Contrary to institutional dogma, ‘advice’ and ‘product’ are not wedded.
WHAT IS ADVICE?
Contrary to widespread practice, advice is less about setting goals and more about managing complexities.
For many, goals are like sunny days – they enthuse us.
However, the advice we receive on our darker days when we feel stuck in a deep battle with our complexities proves to be more valuable, pertinent and needed than any advice delivered on our sunnier days.
That’s the difference between advice and products.
Advice is impartial recommendations about managing the consequences we both fear and hope for ourselves, our interests, and others who are important to us.
If someone faces an issue they can not resolve themselves and is concerned about the consequences of their decision, that is an advice purchase.
Alternatively, if someone is hindered from resolving an issue and not overly concerned about the consequences of the purchase decision, that’s a product purchase.
The product purchase will usually be accompanied by specific product advice without the full context of the purchaser’s broader fears or hopes. Issues such as fees, performances, convenience, and existing confirmation bias are common purchase considerations for these purchasers.
So, is $88 good value for an advice app subscription?
That depends upon two factors.
Firstly, it is inevitable that the clever people who build Google’s Gemini, OpenAI’s ChatGPT, Apple’s Siri, Microsoft’s Co-Pilot, and Meta’s Llama will accelerate the financial advice innovation cycle into exciting new capabilities and value opportunities.
Secondly and more importantly, particularly for decisions during our darker days, is how much value you place on the consequences you both hope for and fear?
Only then can you consider what is of value to you.
What do you reckon?
Photo credit: Shutterstock_1788695051
ABOUT JIM STACKPOOL
Since 1989, Jim has influenced, coached, and consulted financial advice and accounting firms across Australia. His training firm, Certainty Advice Group, skills comprehensive advisory teams to price and deliver valuable, methodical, non-person-dependent advice relationships with their clients. He has built a collaborative community of firms aligned to his firm’s comprehensive advice model – Certainty Advice – Australia’s only Certification Mark accredited by ACCC and IP Australia for impartial financial advice. He presents at conferences, has judged professional advice awards, written industry white papers, chaired practice management curriculum for tertiary institutions, and authored four books on financial advice – his latest being What Price Value.