10.1 Digital advice 10.1.1 A short reminiscence When FSR commenced I spent many weeks combing through a range of calculators and questionnaires (risk profilers and the like) available on the websites of banks, insurers, superannuation funds and others dividing them into those which contained information, those which contained general advice and those which contained personal advice. I remember this work because it was engaging and fun, and I learnt a lot about my own financial situation and how I could improve it. But, what happened is that the banks, insurers and superannuation funds took most of them down. They were nervous that the ones which provided information might provide advice. The ones that provided advice invariably provided personal advice because, what made these tools so useful, was that they asked the user for information about their financial situation and sometimes their needs and objectives. They took them down because it was too hard and expensive to provide a statement of advice and when FOFA commenced it became even more difficult (they thought) to comply with the best interests duty. Since then I have regularly been asked to look at various forms of calculators and other digital advice tools - which will tell the user how much life insurance cover they should have or how much they should contribute to superannuation and so on, and overwhelmingly they have been really helpful and overwhelmingly they have not been made available to consumers because of the regulatory regime. 10.1.2 Terms of Reference The Terms of Reference ask me to consider how technology and digital advice might enable mass market adoption of low cost advice, particularly for young consumers, those with low asset values and consumers who do not currently engage with the financial advice industry. Given that and the broader focus of the Review on increasing the accessibility and affordability of quality financial advice, I have thought a lot about technology and digital advice. 10.1.3 Consultation I saw 20 years ago how much digital advice tools could do and how useful they could be. During consultation we have been told and we have seen - both in Australia and overseas - how much more digital advice can do. It is possible to get a full financial plan and ongoing advice digitally. Some providers charge a modest advice fee and some charge a subscription fee. We have been told that employers will sometimes make these digital advice services available to their employees as an employment benefit. Where a fee is charged, the cost is within the range that consumers say they are willing to pay for personal advice. Much of the more limited digital advice that is available now is provided to consumers without any charge (the ASIC MoneySmart website and the calculators that are available on some superannuation funds' websites or member portals are examples). Many providers are building apps and online client portals which provide prompts and nudges - these are forms of digital advice. In many cases they give personal advice now and they will increasingly do so if the definition of personal advice is broadened as I have recommended. Some digital advice providers combine digital advice with the support of an individual - sometimes a financial adviser. These hybrid models are common in the UK. They can also be used by financial advisers to provide advice to more clients. Technology is also increasingly capable of supporting financial advisers give personal advice more efficiently. Research shows that consumers are increasingly willing to use digital advice tools. In a recent financial capability survey consumers expressed a strong preference for using digital financial products and services 378 Across all ages, 85 per cent of respondents 'agreed' or 'strongly agreed' that using online financial technology would save them time and 68 per cent indicated that they would prefer to use financial technology over other channels to access financial services. I am convinced that digital advice tools can make good quality financial advice widely available. 10.1.4 Barriers and impediments Despite all of this promise, the adoption of digital advice tools in Australia has been slow. There are 2 reasons: we have been told people are reluctant to commit the time, capital and resources to set up digital advice systems while the rate of regulatory reform continues to be so high; and regulatory complexity - and in this respect the impediments now are the same impediments as they were 20 years ago - providers see the obligations applying to the provision of personal advice as not only difficult but uncertain.