Financial technology and infrastructure company, Sargon, has today published its annual Digital Insights report covering July 2018 to June 2019, revealing new insights on digital advice user demographics and activity, in addition to insights into how digital advice and engagement can drive improved compliance and retirement outcomes.
Sargon Decimal – an enterprise platform for digital advice and investor engagement – is one of the largest producers of statements of advice through an automated advice software platform in Australia. It is delivering advice to members with combined balances in excess of $20 billion, up from $13.3 billion the previous year, and $10.2 billion in 2017.
Such strong year-on-year growth demonstrates the continuing uptake of digital advice, providing rich data on how digital advice is being used and what impact it is having for Australians.
Key insights from the report include:
Digital advice is for all ages – This year’s usage data again showed that age is no barrier to digital advice, with everyone from teenagers to octogenarians utilising the Decimal platform. 50-60-year-old Australians remained the most frequent users, accounting for 27% of total users.
Digital advice drives early engagement – Younger Australians often stand to benefit most from advice, as compounding effects mean early engagement can lead to significantly improved retirement outcomes. In FY19:
46% of Decimal’s users were aged between 35-54, compared with an industry average of just 26%;
30% of users were seeking advice for the first time; and
12% of new users were aged between 30-35.
Gender equality in engagement – Last year, more statements of advice were issued to female users than males. Decimal’s provision of equality in engagement can be an important step in the journey towards equality of outcomes in the superannuation and pension industry.
Improved member outcomes – Digital advice licensees using Decimal’s platform improved member outcomes by recommending:
-Superior investment strategies – enabling users to better understand their risk profile and investment goals led to investment strategies better suited to members’ needs.
-Contribution strategies – helping members gain financial literacy around super contributions, tax consequences and how investing just a little now can lead to big rewards at retirement.
-Investment cost savings – implementing advice led to the average cost of investments in superannuation to drop from 0.6% p.a. to 0.5% p.a., while the cost of investments in pensions dropped from an average of 0.53% p.a. to 0.42% p.a.
Digital advice uptake driven by the Hayne Royal Commission – Decimal recorded significant surges in user demand during key milestones of the Hayne Royal Commission and other significant events during the financial year, reflecting that investors are actively using digital engagement to monitor their investments.
Decimal provides robust yet agile compliance solutions – The Decimal platform provides agile, automated compliance solutions that allowed advice licensees to respond rapidly to regulatory change. Upon publication of the Hayne Royal Commission report, Decimal recorded a significant increase in the number of automated compliance checks triggering advice warnings and advisor referrals, demonstrating effective implementation of compliance checks.
Reflecting on this year’s Digital Insights report, Sargon Chief Executive Officer, Phillip Kingston highlighted the broad demographics of Decimal’s users, improved regulatory response and compliance through Decimal, and the strong correlation between engagement and retirement outcomes.
“It is striking that Decimal’s digital advice platform is used by all segments of the Australian population,” Kingston said.
“Tired stereotypes do not apply here. Older Australians have no issues using digital technology, while younger Australians will engage with their superannuation. Decimal’s role is to provide the platform that removes the time and cost barriers that may have otherwise prevented that engagement.
“In a turbulent year for the superannuation industry, Decimal provided funds with a robust digital advice platform that delivered consistent, conflict-free advice. What’s more, it enabled funds to quickly respond to ongoing regulatory change, ensuring their advice stays compliant.
“Importantly, this year’s report clearly shows that improved financial literacy and engagement will very likely lead to improved retirement outcomes for Australians.
“Superannuation is one of Australia’s greatest national assets. Improving financial literacy and engagement represents a simple yet powerful way to not only improve retirement outcomes for members, but to secure the future wealth and prosperity of Australia.”
The full report is available on the Sargon website.