The Fourth Line Story: A Reflection on 4 years

The Fourth Line Story

The financial advice industry has reached a point of inflection creating the opportunity for players to emerge and lead the industry through the next stage of its evolution.

The core challenge faced by the industry is the inability to provide ordinary Australians with access to the advice they need, when they need it, in a way that’s convenient, and at a price they can afford.   Australians want access to advice delivered by advisers they can trust and who operate with strong professional standards.

The Problem

The Banking Royal Commission laid bare how the financial advice industry, with its foundations in product distribution, had been ripping off ordinary Australians with impunity.

Much of this was due to a lack of effective oversight or care by institutions, many of which manufactured products and distributed them through aligned adviser networks.  The Royal Commission made clear the industry had been operating with a blatant “Profits over People” approach.

The advice audit process lacked robustness.  It had been built around a backward-looking, random selection of a few client files per adviser per annum.  The licensee, with a vested interest in ensuring its advisers met the required audit benchmarks, was responsible for selecting the files to be reviewed.  The audit process was built on the maxim “See no evil; hear no evil; speak no evil.”

Product distribution and profits were more important than the quality of the advice provided to clients or the impact the advice had on individuals.

The Why

The foundation of Fourth Line lay in the desire of its founder to “right these wrongs” and ensure this blatant disregard for client financial welfare never happened again.  As ex-financial advisers and industry experts, they knew where the flaws in the advice oversight system lay – there was a lack of scalable, real-time oversight of advice.

The founders had a vision that one-day, through state-of-the-art technology, AI, and machine learning, every piece of advice created by financial advisers in Australia could be reviewed with a high degree of accuracy and consistency so that any flaws or errors were identified and remedied before the advice was presented to clients.

The idea was simple – to protect consumers from the devasting impact of poor advice; to protect advisers by improving the quality of their advice; and to protect licensees which are ultimately responsible for the advice given to consumers.

The How

Fourth Line is a rigorous risk management and compliance system that empowers and enables advice practices, licensees, and other wealth management participants to demonstrate they are taking responsible steps to act in the client’s best interest and provide appropriate advice.

Fourth Line’s comprehensive, algorithm-based risk management solution is a unique bionic approach that combines state-of-the-art technology with high-caliber, personal oversight from industry professionals.

Fourth Line overcomes the systemic “selection bias” inherent in traditional audit programs by enabling every piece of advice to be reviewed before being presented to a client. By interrogating advice in real-time, Fourth Line identifies issues that can then be fixed, and advice breaches avoided.  In doing so, clients are protected from poor advice, advisers have peace of mind their advice is compliant, and licensees avoid potential remediation claims.