The executive director of the Association of Independently Owned Financial Professionals (AIOFP), Peter Johnston, has accused the government of pursuing the introduction of robo-advice despite the fact that it has not worked anywhere else in the world as consumers continue to value human interaction over computers.
Mr Johnston compared the government's push for robo-advice to the banks' introduction of the conflicted vertical integration advice model.
"The greatest industry conflict over the past 30 years has been when the banks introduced the profoundly conflicted Vertical Integration advice model, this is a very similar concept without the human content. It just another ‘sneaky’ strategy to only offer an in-house product to already existing clients regardless of their quality," Mr Johnston said.
He called on the removal of academics and bureaucrats from industry debate.
"The biggest mistake politicians, ASIC and consumer groups make is they fail to recognise that the advice community does not want the bad eggs in the industry and will assist the process to remove them," Mr Johnston said.
"This failure has resulted in inexperienced humans making naive decisions resulting in massive red tape strangulation, duplication and ridiculous uncommercial conditions that ironically consumers are indirectly paying for.
"The last thing we want are a bunch of academics trying to develop a conflicted product to ‘clip’ the ticket on industry revenue."
Mr Johnston does, however, recognise benefits in limited robo-advice.
"There is a minor place for robo-advice going forward in conjunction with human advisers to assist when things go wrong with markets and/or products," he admitted.
Contributing to the robo-advice debate, in September Financial Services Minister Jane Hume said that while “no one has yet cracked the nut” of full robo-advice service, it does not harm advisers or their business.
“And when someone cracks the nut — puts together a fantastic product — I also don’t think robo-advisers are going to replace the 18,000 or so financial advisers practising in this country,” she said.
“What robo-advice and other digital tools will do is offer an alternative for people who don’t currently have access to an adviser, or who wouldn’t pay for an adviser.
“It will get young people more engaged with their finances. And it may act as a gateway to full-service financial advice.”