Ignition Wealth’s Chief Executive Officer speaks to FST Media about how robo-advice represents an opportunity for innovation in wealth management.
FST Media: What are your key priorities for the next 12 to 18 months?
Fordree: Our priorities are to build the Ignition Wealth brand with the key attributes of trust, smart technology, value and service.
What we are doing now is looking at the opportunity of bringing an automated advice engine into the Australian context and that is exactly what Ignition Wealth is.
The key point is that around 75 per cent of Australians do not have access to financial advice because they are deemed uneconomic clients by the industry. You can walk into a bank or a product manufacturer and they will happily sell you their own product, but if you want to get independent, unbiased advice you really need somewhere north of $250,000 to invest before a traditional advisor will have any interest in talking to you.
Technology like Ignition Wealth is going to allow people with even very low balances of $5,000 or $10,000 to use self-assessment tools to create a risk profile and to get access to a portfolio which manages, or which matches their life goals and their risk profiles.
FST Media: What will financial planning will look like in 2020?
Fordree: In 2020, the key components of financial planning, such as helping people reach and manage their life financial goals, will be the same. Technology like Ignition Wealth is going to allow the mass unadvised market to access financial tools, portfolio creation, execution, monitoring and reporting. It will be readily available to them, whereas at the moment they are locked out. We see a massive growth in financial advice driven by technology making it both affordable and accessible.
FST Media: How significant are fintechs to helping fulfil Prime Minister Malcolm Turnbull’s vision of cementing Sydney as a hub for innovation?
Fordree: I think that fintechs are a massive wave of disruption to the way most of us engage with our banking, finance, insurance and debt needs. Sydney has a huge opportunity to be at the forefront of Fintech and we certainly welcome any further government encouragement and support. For example, we are partnered with the University of New South Wales and we are reaching out to experts, both nationally and globally, to be part of what we are doing. We certainly think that the opportunity in Australia is at a national level and we are seeing plenty of opportunities in Melbourne, for example, but with the concentration of financial institutions in Sydney, there is clearly a focus on Sydney as a hub.
The proof of the pudding is going to be in a lot of these startups actually turning into cash flow positive, scalable businesses. I think that we have not really seen that at scale yet. There are certainly going to be some significant winners coming out of the current batch of startups, but just like we have seen in every environment where young ideas are fostered with potential game-changing technologies, there are going to be winners and losers.
FST Media: What does disruption mean to you?
Fordree: We see disruption as technology changing the way we do things on a large scale. I think it is very easy to explain our view relative to what we are seeing, not just in Fintech, but across the global economy. If we look at the advent of ATMs and online banking and how they are changing the way we do our banking today versus 15 years ago, it is completely different. The financial impact to the banks of embracing that technology rather than having a one-on-one teller to customer service has been enormous, but it is not just Fintech. You look at the travel industry, accommodation, retail, shopping, technology and disruption is completely changing business models. I guess one of the biggest trends we are seeing is that if you look at companies like Alibaba, Airbnb, or Uber, one thing they have in common is they generally do not hold any stock. That is a complete reversal to what we have traditionally seen in legacy businesses going back 20 or 30 years.
FST Media: To what extent does robo-advice represent an opportunity for innovation when it comes to wealth management?
Fordree: I think that robo-advice is often seen by advisors as a threat to their business, but we actually disagree with that. We think that robo-advice is an opportunity for both consumers and advisors to embrace technology and use self-service tools to significantly improve the efficiency of the sector.
Technology is an opportunity for advisors to grow their businesses. We think that with our high-tech, low-touch, low-cost product, we could potentially see a doubling of customers embracing financial advice over the next decade.
FST Media: With respect to career progression, what has been the best career advice that you have ever received?
Fordree: In my early days of a stockbroking career, long lunches were the norm and I had the opportunity to speak to all the top clients in the afternoons because I was the one that was always there and after about 12 months all of those clients were mine. I think that I was lucky enough to be in stockbroking at a time when it was very much an old-school boys’ club. The fact that I came in with a very different attitude to the way clients should be serviced certainly held me in good stead and I think that we are seeing absolutely that opportunity again in financial advice.
FST Media: How do you encourage a culture of innovation in your team?
Fordree: One thing that we have done very well here is that we have got a great blend of both young graduates and interns who are very representative of the way millennial investors are approaching their personal finances. We have blended that with highly experienced industry professionals against a backdrop of the fact that we are a technology company with a capacity to both integrate and embed our technologies into what we would call legacy systems. Ignition Wealth has a pretty unique set of attributes which I think make us pretty well-positioned to scale this business rapidly.
FST Media: Every leader has a legacy that they wish to be remembered for. Mark, what is yours?
Fordree: I think that what I have tried to do is not think in silos, but look between them for opportunities. We are on a mission here to bring sophisticated financial advice to the masses and that is certainly a legacy that we would like to be part of.