The development of digital platform is enabling funds to better comply with the Australian Securities and Investment Commission (ASIC) by automating compliance and providing documentation of key data sets related to members.
State Super Financial Services’ use of digital platforms means defined parameters are set around the advice the fund’s advisers can give, as the system doesn’t allow deviation down a non-compliance route. Additionally, the growing amount of data enables increased understanding of operational risks.
This week, as part of QSuper’s mission to offer a tailored investment solution for all its members, it launched online advice, commonly referred to as robo-advice.
The advantage of robo-advice is its ability to document members risk profiles, income needs in retirement, attitudes to risk, their expressed desired income and desired retirement age, meeting compliance requirements without the need for a human.
Philip Hardy, partner, financial services assurance and advisory at Deloitte, said: “We’re seeing ASIC talking a lot more about real-time compliance monitoring and when organisations start to focus more around how they better manage their data and how they use digital, that will only enhance the ability to better manage and better monitor their advisers.”
Deloitte held a seminar in Sydney on the topic of advice this week, coinciding with a similar event by Milliman.
Wade Matterson, principal at Milliman, spoke of the role of an adviser having to change with the rise of digitisation. If robo-advice can do the risk analytics and stochastic modelling for each member, the role of the advisor would have to add value in helping members choose suitable investment options to match, he predicted.
He added that the banks were more advanced in engaging with their members around such predictive modelling.
He also made the point that funds could spend millions on robo-advice models and that they could fail, comparing it to the money spent by funds on member direct options, half of which he knew anecdotally had low take up.