Advisers who offer digital advice tools should aim to make them as tailored to the client as possible, despite the increased legal responsibility in offering personal advice, according to financial data aggregator eWise.
Speaking to Adviser Innovation, eWise founder and former lawyer Alex Grinberg said advisers looking to maintain an ongoing relationship with digital advice clients need to make use of clients’ personal financial data.
Advice is considered ‘personal advice’ when it takes into consideration one or more of a client’s objectives or financial situation needs, and services offering such advice are then subject to the client’s best interest regulations.
“You can’t simply say: in order for me, as a financial adviser, to minimise and avoid liability I’m not going to look at data because looking at data means that I’m now more personally liable,” Mr Grinberg said.
“That relationship may have some value, but how long term that relationship is going to be is questionable.”
While digital advice alone may suffice for some clients, he said, advisers would benefit more from engaging clients and building a “lifetime relationship” with them.
“For some segments of the customer market, that may be fine, because they’re so engaged and so self-directed they need minimal involvement from an external adviser,” he said.
“[For] the customer base that’s relevant and meaningful in terms of generating value and profitability for financial advisers; at a point in time you have to roll up your sleeves and have to draw on that financial data – even if that involves offering personal advice.”