The top three themes at the SAFAA Conference 2020

COVID-19 has created many business challenges and opportunities, with no industry left untouched. The stockbroking industry is not immune, and many of these were explored at the recent Stockbrokers and Financial Advisers Association (SAFAA) annual conference. The fully-virtual conference had a number of different sessions over two days, which looked into the unique issues faced by the stockbroking and private advisory industry in Australia.

It was a different experience attending virtually for the first time ever, but I felt there was a greater ease of real-time connection to speakers and panels, across different sessions focusing on technology, regulation, and transformation. It also allowed those not normally able to attend due to the cost and time of travel the opportunity to easily view the sessions that interested them. Personally I missed catching up with those in the industry in a social setting. Let’s hope we are able to do it again in person next year.

We’ve certainly noticed the transformation of the industry this year with a big increase in the number of Iress ViewPoint licenses since the start of the year. New demographic data from the ASX highlights the current changes afoot, with women and young people increasingly lining up to invest. The SAFAA conference shone light on the newly dubbed ‘Robinhood’ investors, which are giving more diverse people an easy way into investing small amounts, and this has ramped up since the onset of COVID-19.

Ethical investing is definitely an up-and-coming trend and the younger people entering the investment market as ‘Robinhood’ investors are prioritising this. ESG will be critical to investing in the post-pandemic world. With many new people entering the investment market - it seems robo advice is being favoured for smaller amounts, however people are still prioritising human interaction for larger transactions.

Regulation was a big theme coming out at the conference and Stuart Frith, our Sales & Delivery Director for Iress’ data analytics software Lumen, spoke on a panel about how Australian licensees are ensuring advisers comply with the FASEA Code of Ethics, particularly in the COVID-19 environment.

As the industry is pushed to digitise, software can now provide an in-depth picture of the operational and compliance performance of a financial advice licensee’s business—and its authorised representatives—by identifying where the risks lie. Not only are compliance issues being solved, but it's helping to build strategic outcomes that make financial advisers more efficient, as well as enabling businesses to deliver better client service.

Here are the top three stockbroking industry themes that I observed at the conference.

1. Tech underpins every industry so shouldn’t be an independent sector

Investment in the tech sector has been steadily rising for years and COVID-19 related market volatility has brought more focus on that sector. One panel session looked at the impact of the market turmoil.

While supermarkets and toilet paper manufacturers benefited from the early panic buying stage of the pandemic, this was short lived. Technology companies however, have been big beneficiaries of the pandemic, and this will have a lasting effect.

Change is constant, more than ever before, and the tech sector must position for innovation to meet disruption. The panel shared that moving infrastructure into the cloud is a massive business and will continue to grow. Cloud technology can enable scalable and expansive global opportunities, as seen in exponential technologies like Afterpay, Shopify, and Xero. It has been estimated that some industry changes have been accelerated by about 3-5 years. Naturally these would have taken far longer if not for the ramifications of COVID, which has forced people to move online more than ever for shopping and to collaboration tools like Slack and Zoom, and to cloud technology more generally.

What was clear is that pandemic or no pandemic, all industries are being disrupted by technology. So is the concept of a tech sector outdated?

2. New education standards welcomed but challenged

The financial services industry faces the issue of an ageing workforce and challenges of both attracting younger and more diverse employees and retaining experienced advisers who should be mentoring the next generation. There was much discussion across many sessions around the new Financial Adviser Standards and Ethics Authority (FASEA) standards for education, training and ethical standards of licensed financial advisers in Australia.

Overall it seems the new educational standards to the industry are welcomed but there is concern with the implementation and the transition phase. There are also worries that experienced advisors will leave the industry, as years of experience will not be recognised, and advisers will be required to go back to study and take exams.

There is a lack of recognition of prior education, with certain Universities and courses still not accredited, and the courses that are available being not as relevant for a stockbroker.

These challenges are compounded by the difficulties for businesses in supporting younger employees generating revenue in the short term under the FASEA model. Not all smaller firms will find it financially viable to support the younger generation through their study and professional year, and there are fears of smaller firms poaching staff once they have been trained at the larger organisations.

3. Technology has a big role in supporting the efficiency and compliance of advisers

Licensees in Australia are acutely aware of the focus of regulators and have an obligation to ensure that their advisers comply with the FASEA Code of Ethics. My colleague Stuart Frith joined a panel to discuss compliance to FASEA in a COVID-19 world.

There certainly seems to be regulatory fatigue in Australia. It takes time to develop and implement systems to meet regulatory requirements. Change is tough, and advisers are having to relearn how they do their job. Technology is the key to ease compliance challenges in our changing world.

The Assistant Minister for Superannuation, Financial Services and Financial Technology, Senator the Hon. Jane Hume, shared in another session that technology can also create greater efficiencies for advisers, and in turn make financial advice more affordable and accessible, enabling advisers to focus their time on adding greater value to their clients.

Technology can not only solve the compliance aspect but also create a data asset for advisers and their clients, to make businesses more efficient. By identifying and managing potential risk, compliance software can turn data into valuable business intelligence, creating a wealth of opportunity for advisers and client engagement.

It’s clear that amongst changing regulations, changing markets and economic volatility, technology has the potential to guide us through the current pandemic and into the future.