GBST’s acquisition of Advice Intelligence will bring digital financial advice services to the institutional market amid growing expectations that super funds provide more advice and improve member experience.
The acquisition was announced in late July after Advice Intelligence’s major backer, Regal Funds Management, withdrew its investment in May.
With digital advice providers struggling to penetrate the retail adviser or direct consumer markets, the acquisition by GBST – which has a substantial existing business as a provider of technology and services to super funds– means the Advice Intelligence software will be introduced to the institutional market.
This strategy comes amid calls from the government for super funds to offer more advice off the back of the Quality of Advice Review, presenting an opening for digital advice providers to offer services to trustees that will have to fulfill an obligation to give more advice to members.
Advice Intelligence founder Jacqui Henderson says this is a key strategy for the service
“It’s really important for superannuation funds to leverage technology like ours which we didn’t have the distribution capability,” she tells Investment Magazine.
GBST has traditionally been a provider of technology to super funds, wrap platforms, fund managers, custodians.
Rob DeDominicis, GBST group CEO, similarly notes the issue of the cost and accessibility of advice.
“What we were attracted to with AI’s technology was… it’s a digital solution and it would enable the super fund to be able to provide a hybrid advice solution or a standalone digital advice solution to a member,” DeDominicis says.
“We were already actively engaged with discussions with super funds around our capability. We’ve already started to demo the product to them because we’re established in that space.”
Domestically, Henderson says it will continue to be a two-pronged approach by servicing both the institutional and retail channels particularly for C and D clients that may not fit the business models for holistic advisers.
“We’re going to continue to service the advice businesses in that traditional model but [help] enhance their value proposition to provide hybrid advice,” Henderson says.
Pre-acquisition, Henderson says the priority of the business was digitising advice practices.
“That was the core focus of the business and part our product roadmap going forward with the innovation that supported digital advice in two models which is the hybrid and digital model,” Henderson says.
But after Regal pulled out, Henderson says several other parties expressed interested in the technology.
“There’s been an extensive amount of research and development around digital advice within the smarts of our platform,” Henderson says.
“We commenced conversations off the back of that and under the guidance of the administrator that we had engaged to advise us through the process.”
Off that back of those conversations, Henderson says the firm chose to partner with GBST.
“That provided a really good fit in terms of strategic direction for us in helping to leverage the business to move into where we wanted it to be, which was to provide digital advice at scale through larger institutional advice businesses and superannuation funds,” Henderson says.
The priority for GBST will be to consolidate a position in the local market for Advice Intelligence, but future scope will include developing the service for other markets.
“We’re actually looking at that because our footprint is actually larger in the UK than it is in Australia in terms of the numbers we serve, it’s substantially more,” DeDominicis says.
“There’s a strong need for that in other markets. It’s the same issue, they have the same problem that we have – how do you deliver advice to members of a pension fund affordably?”
DeDominicis says he will be in the UK next month to discuss the service with the global tech provider firm’s pre-existing relationship base but there is no urgency to introduce it to offshore markets.
“First of all, it’s about Australia because the product is here,” DeDominicis says.
“Taking the product into another market, there’s a process you through. You have to engage with potential prospects, understand the market, what drives the outcomes they’re looking for.”
Henderson says the advantage of the partnership is it coincides with the plan to inevitably take Advice Intelligence into offshore markets.
“We have developed this in the most complex tax and superannuation environment in the world,” Henderson says.
“If we get that right, then being able to take into offshore markets is much more simple. We’ll have to go through the process of localising the technology for the different tax and superannuation environments of those markets, but that’s always been a key objective.”