Former Praemium chief executive Arthur Naoumidis is planning to use his technology background to create a new business that provides scaled advice through the Internet.
Naoumidis, who is currently on gardening leave after resigning from Praemium in August, said the cost pressures placed on planners by the Future of Financial Advice (FOFA) reforms together with increasing Internet usage would create a consumer segment that demanded advice through social media.
"The real big driver for me to venture in this area is the trend towards increased Internet and social media usage. In the five weeks since my departure from Praemium I have noticed that people in suburbia have been using social media a lot more than I thought," he said.
"I think there is clearly an opportunity in blending social media with technology and with the regulatory changes coming there is room to deliver a solution to a new class of investors who want to interact with their planner in a different way.
"The FOFA reforms coming through are going to change some of the dynamics of the financial planning industry and make advice more expensive."
Some financial planning businesses were examining the potential benefits of providing scaled advice through social media, according to Investment Trends analyst Uwe Helmes.
"I know there is interest in this area and quite a bit of work being done around providing scaled advice through the Internet," Helmes said.
"No financial services company owns or dominates the social media space yet as a way to communicate with clients. But companies will focus on this communication more going forward."
Fifty-three per cent of all superannuation fund members used some form of social media, according to the 2011 Investor/Member Sentiment and Communications Survey conducted by Investment Trends.
Of those who used social media, 46 per cent said it was acceptable for financial services companies - including advice businesses - to communicate with them via social media, the survey said.
The business Naoumidis said he planned to develop would initially provide scaled advice through social media, and clients who wanted holistic advice would be referred to other quality planning businesses.
He said he did not want to delve back into portfolio administration technology as he had already built Praemium 10 years ago and was still the largest shareholder in the company, which is now under the leadership of Michael Ohanessian.
