Consumer found most of the financial advisers surveyed gave poor advice and their advice lacked proper analysis of client needs and transparency in disclosing costs and interests. “The findings are very disappointing but not surprising as the industry has been largely unregulated until now,” Cotton says.
“Investors must be able to trust the advice they get and that’s clearly not the case.”
“The Commission is working with other agencies and the industry to put in place a framework to make financial advisers more accountable. We expect to have this in place by the end of next year.”
The key changes include:
“The aim is to build the professionalism and integrity of the industry so that investors can have confidence in the advice they get,” Cotton says.
In the mean time she encourages investors to shop around.
“Advisers must be able to understand investments they recommend and clearly answer any questions investors may have. Investors should make sure they are completely comfortable with any recommendations before committing to an investment.”
“Investors should also be aware that under existing law, financial advisers are required to provide clients with a written disclosure statement outlining their credentials, fees and any relevant interests before giving any advice.”
Tips for choosing a financial adviser
Who is the adviser?
Do they belong to a professional adviser association? What qualifications and experience do they have? Do they work for themselves or for an organisation? Make sure you get a written disclosure statement before you get any advice or pay any money.
What services does your adviser offer?
Does your adviser specialise in offering the products or services you are looking for? Has the adviser asked you questions that demonstrate that they properly understand your needs? Will the adviser put details of the advice, and answers to your questions in writing for you?
How much will it cost?
What is the maximum you will pay for the advice? Will you be charged fees? Will commissions be deducted from the money you invest? Will the adviser get any other form of payment or remuneration as a result of your investment? Will they continue to receive some form of payment or remuneration in future years?
Use your common sense. If an adviser is slow to respond to your questions or is not able or willing to support or discuss their recommendations then go elsewhere.
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