Non-traditional investment products such as digital assets can carry greater risks in terms of market volatility, however it’s clear they are now very much a part of the investment mix. The growing demand in this area calls for investment advice that can guide investors through a myriad of options, while helping to navigate these risks as well as the unique tax implications and regulation they may come with. To support successful investing in digital assets, advice technology will need to evolve to include API integrations that allow for a more holistic approach to diversified portfolio construction.

Within the sphere of traditional advice, product proliferation has exploded in recent years, which is why tools like WealthSolver and RiskResearcher are critical in understanding the best fit for clients. Iress will continue to invest in these tools, as well as expand into new areas to include the broadest possible view of the wealth and insurance landscape.

The Iress view

of investors are interested in investing in cryptocurrency¹

29%

The Australian investment landscape has undergone significant transformation over the past three decades. This shift is marked by a proliferation of investment products, driven by a desire for diversification, potentially higher returns, and the influence of technological advancements.

Estimates show that currently 23% of Australians currently own digital assets². And it’s mostly younger cohorts that are driving this adoption, with over 50% of millennials currently owning or having previously owned cryptocurrencies³. However, these new investment products come with complexities that need to be properly understood - and managed.

Key to this megatrend will be the integration of ESG screening tools into advice technology, to empower advisers - or Australians looking for a more self-service advice option - to effectively make sustainable and customisable investment choices in line with their personal ESG preferences. This may include ESG risk assessment tools, integration of sustainability criteria into portfolio construction, availability of ESG reporting and the use of generative AI to analyse corporate governance data and assess an organisations’ ESG performance.

The Iress view

of investors are actively investing based on ESG principles¹

31%

A growing number of investors today want to know where their money is going, and the impact it will have on our people and planet. Once purely a financial decision, our investment choices are becoming more aligned with our values, with 31% of Australian investors today actively investing based on Environmental, Social and Governance (ESG) principles².

This growing desire for transparency is also driving increased scrutiny of whether investments are adhering to ESG guidelines. Concerns about ‘greenwashing’ have increased since 2021 and have resulted in ASIC intervention. With this green wave of investing only expected to gather pace, what will be needed to help investors make more sustainable investment choices?

As wealth changes hands from generation to generation, and even partner to partner, it’s critical that advisers build strong relationships across the family unit. As general practitioners think about ‘cradle to grave’ care, so too must advisers adapt their service offerings to cover the gamut of advice needs from retirement income and aged care, to education on investments, financial literacy and wealth accumulation.

Iress will continue to invest in scenario modelling tools like Xtools+ and Cashflow Visualise, which will become even more important in helping clients visualise different wealth distribution options and tax-efficient strategies across the multi-generational mix.

As we look further down the road, our focus shifts to what a true multi-generational advice software solution should look like - one that allows the broader family unit to be represented, considered and advised in an efficient and effective way.

The Iress view

to change hands annually¹

$175bn

Having built hard-fought wealth over decades, a whole generation is now entering retirement en-masse, and priorities are shifting profoundly. Alongside grappling with what retirement means at an individual level, planning for how to support children (and grandchildren) in an ever increasingly complex world has become a major focus.

With over $3.5 trillion set to change hands from one generation to the next², this is an unprecedented event in our history. But it’s not just the money side of considerations like asset transfer, aged care, income in retirement either - these are emotionally charged topics that need delicate consideration, discussion, and even mediation. So what should advice look like as we face this multi-generational, societal challenge?

We believe that in order to bring more advice to more Australians, technology must evolve at an unprecedented rate to enable more cost-effective mass delivery of financial advice. With the ability to deliver a low-fee alternative to traditional advice, we open the door to those looking for simplified investment strategies and basic financial planning through models such as subscription services, for example.

Iress has been at the forefront of digital advice solutions, underpinned by the power of Xplan. To meet this growing need, we will continue to build on our industry-leading suite of advice tools to support the industry to meet the advice needs across a number of dimensions - as well as leverage emerging technologies to increase efficiency, scalability and personalisation.

The Iress view

of advisers emphasise the important role of technology and automation to expand their capacity to serve more clients¹

60%

Life is becoming increasingly complex, and today, approximately 11.8 million Australians have unmet advice needs². But with the cost of advice out of reach for many, one in four Australians are turning to family, friends or colleagues for advice³. But at what cost?

This megatrend presents a very real and urgent opportunity for technology to fill the advice gap and cater to the millions of Australians who have a simpler set of advice needs, or desire for a more self-service approach. With adviser numbers steadily decreasing in recent years, and Australians becoming increasingly sophisticated and tech-savvy, the delivery of low-cost digital advice at scale presents an exciting prospect for Australians, and the industry.

Vital to supporting the next generation of working Australians will be supporting the delivery of advice in a vastly more scalable way. This will allow younger clients to engage much earlier with simple advice to help them understand and leverage the tools they have at their disposal - superannuation and investing outside of property as foundations of their pathway to wealth. It will also require us to consider very different looking asset mixes (for example ETFs and digital currencies), many of which younger Australians are already investing in, but may sit outside the traditional advice remit.

At Iress, our commitment and focus is on supporting the advice industry with new digital-led advice tech that will allow advice providers to meaningfully deliver advice at scale. We’re also focused on expanding the universe of product and asset connectivity through the market’s leading source of data feeds - IressNet - to support the broader needs of tomorrow’s advice customer.

The Iress view

of 45-54 year olds won’t own a home by 2036¹

43%

The great Australian dream of owning a home is no longer a reality for many, with housing prices steadily on the rise. Over the past 50 years, home ownership rates have undergone significant changes across age groups. Particularly, young adults aged 25 to 34 have experienced a steep decline in home ownership².

An increasing number of customers will require financial advice to build wealth through alternative means, while navigating the complexities associated with not owning the principal place of residence, especially in retirement. With 21% of advice customers falling within the 18-35 age bracket, there is a growing need for financial advisers to engage with this younger demographic, and in doing so, advisers will need to adopt strategies that resonate with their financial aspirations and challenges.

Financial advisers will need to play a crucial role in two key areas: (1) helping clients manage the growing risks of climate change, and (2) navigating what can be a complex and traumatic recovery process following disaster-related damage.

As such, we believe that advisers will need better investment data and tools to develop risk-tolerant portfolios that provide protection against market fluctuations, including those caused by natural disasters. We also believe that the scope of advice must become broader in order to encompass whole-of-life insurance needs of Australians. And to successfully support those clients during the aftermath of a natural disaster, advisers will need better access to government incentives, rebates and tax concessions data so that they can step in and organise their client’s financial affairs and alleviate this administrative burden.

The Iress view

of the population has experienced natural disasters since 2019¹

80%

With one in three Australians affected by the 2019-20 bushfires, and 80% of Australians having experienced a natural disaster since 2019², climate risk has become a widespread reality for many. And what we once knew to be ‘as safe as houses’ is no longer something that can be taken for granted.

An increased threat of natural disasters close to home calls for the ability to build resilience against what can potentially be a devastating impact to our finances. The annual cost of natural disasters and environmental volatility to the Australian economy is expected to rise from $38 billion to $73 billion by 2060³. With these increased risks, what role can financial advice play in helping Australians protect their families, their homes and investments?

It’s clear that to meet this enormous demand, advisers will need to increase efficiency to serve more clients. One opportunity to address this is through better data. Under Consumer Data Right (CDR) legislation, we hope to see advisers gain greater access to aged care, tax and healthcare data from the ATO and other key sources, to enable a more streamlined, holistic approach to delivering advice.

The second opportunity is through harnessing better advice tools. As an industry, we need to move quickly to support better retirement income planning and modelling. While our WealthSolver, Risk Researcher and the Xtools suite are the most powerful on the market today, we are also focusing on new initiatives which support retirement income solutions.

The Iress view

of the working population aged 65+ by 2034¹

23%

Australia’s population is ageing, and over the coming decade, the number of Australians entering retirement is set to explode. With age groups 65-85 years and 85+ years predicted to grow 25% and 50% respectively², we will see an unprecedented demand for retirement advice.

While living longer may be good news for most, it presents more challenges when planning for retirement. The ability to provide a sustainable income for a phase of life that could last three decades becomes an increasingly complex, yet essential need. With demand for advice on pensions, aged care and superannuation already on the rise, how will this skyrocketing retirement demand be met?