Online delivery will soon begin to replace bricks-and-mortar businesses in the financial advice industry, according to Netwealth MD Matt Heine.

“Advisers need to be aware of how they should deliver their services in future,” he told an Association of Financial Advisers roadshow in Melbourne last week.

“You need to make sure your advice footprint is strong online.”

Mr Heine says Oxford University research predicts computers will deliver 58% of financial advice in the next 10 years.

“We are seeing online advice websites in the US, with Personal Capital tracking $US70 billion ($74.5 billion) of investments on behalf of clients,” he said.

Quality of advice will also face increasing scrutiny, with the VouchedFor online consumer rating and review website already launched in the UK.

“If you are a two-star adviser you will see a decline in your business. The advisers rated four or five stars are seen as experts and their businesses are growing.”

He expects a similar service to launch in Australia.

“This is the age of the consumer and we need to look at how businesses are evolving. Information is now important like never before. Advisers and companies need to look at how to evolve their businesses to embrace the consumer.”

Mr Heine says people now offer services from home and put a price on what they provide.

“What’s mine is yours for a price. They are taking the latent capability and selling to somebody who wants it, cutting out the middleman.” 

He says a German social network insurance company called Friendinsurance allows people who want cover to ask friends to contribute to the excess, allowing them to reduce their premiums. 

“It is spreading through Europe and could apply to life insurance,” Mr Heine said. “In the US, State Farm Insurance is opening up branches in local communities that are cafes – no products are sold at the outlet.

“The insurer wants to give something back to the community, but if somebody asks about insurance they are sent online or down to the nearby outlet.

“What we are seeing is not a revolution in financial advice, but evolution.”