Direct investors are missing out on valuable advice because the industry is antiquated in its functioning and has “potential for accidents” wait to happen, ”said one panel.
Speaking at the Calastone Connect Forum, Tim McGowen, Managing Director of Informed Investor, said the typical director investor is associated with the younger demographic investing in the under-explored, inefficient end of the market.
“I am a firm believer in financial advice, and I think one of the accidents that may be waiting to happen is with this type of investor,” said McGowen.
“That type of investor is the barista on the street who has his stocks on a watch list. How is the industry attracting these types of investors to the advisory industry for products managed on their behalf? That is one of the challenges for the future. “
McGowen said that advice can only be provided through technology as direct investors are currently being served on information.
“There is an army of investors following various trends on social media platforms. They can trade a stock very cheaply, but the real question is how will the industry serve this investor in the future since there is an army of them used to technology, ”said McGowen.
“The consulting industry in particular is quite antiquated when it comes to customer care.
“They are factsheets, his PDS [product disclosure statements], there is an SOA [statement of advice] production takes 10 hours.
“The consulting industry is a real challenge that already has its challenges in serving this direct investor.”
Sam Hallinan, CEO of Schroders Australia, said the wealth management industry could learn from the evolution of the travel industry to serve a broader and ever-changing demographic base.
“If you were a traveler thirty years ago and you wanted to experience Sydney, you went to a travel agent and that travel agent booked you into the Four Seasons and you went to the hotel and then you went back home. ” he said.
“Twenty years ago people said, ‘I want something different,’ so you started to see boutique hotels popping up on the outskirts of town like Surry Hills and Paddington.
“Then 10 years ago people said, ‘I really want to immerse myself in Sydney life’ and in the background we saw the creation of AirBnB.
“You then went to a converted warehouse in Newtown and sat a six-pack of Newtowner pale ale in the refrigerator and in the afternoon you went to see how the pale ale was made.”
Hallinan said this is what people expected and the industry does not offer them a comparable experience.
“From a manufacturing perspective, the only way to deliver that experience to the end investor is through technology,” Hallinan said.
“Right now, relying on the mechanisms we have given people to access mutual funds and managed funds is simply not going to be enough.”