Kiwis' 'vitriol' towards advisers revealed

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Many New Zealanders still see financial advisers as untrustworthy and unnecessary – but those who use them are happy with the service they’re receiving, a survey has found.

Thursday, November 7th 2013, 6:48AM 6 Comments

by Niko Kloeten

The poll of more than 2400 people by Horizon Research was commissioned by the New Zealand Financial Advisers’ Association (NZFAA).

Its findings were presented at the industry organisation’s annual conference yesterday.

Advisers were found to rank among New Zealand’s least trusted professions, with investment advisers less trusted than tow truck drivers and radio talkback hosts. 

A quarter of people saw investment advisers as untrustworthy, while only 20% rated them trustworthy.

Financial planners, insurance advisers and mortgage brokers fared slightly better, with roughly equal numbers rating them trustworthy and untrustworthy, but they still rated below lawyers and accountants.  Stock brokers were the least-trusted finance professionals in the survey.

But most people who use an independent financial adviser were happy with the service they received, although follow-up was one area that needs to be worked on.

Among those who don’t use an adviser, 70% think there is no benefit to having one.  And 33% of those currently using an adviser see no benefit from it. 

Horizon Research manager Grant McInman told the conference there was a mix of views about advisers overall, but he was surprised at the “vitriolic” attitude of some respondents.  Most comments on advisers were negative.

“I’ve never seen anything as vitriolic as some of the comments we saw about financial advisers.  They were really nasty and I can’t print them.  I was really quite surprised by some of the reaction.” 

McInman said the response was largely the result of the collapse of the finance company sector in recent years, which caused people to distrust anyone associated with the financial industry.

“It’s an amazingly strong response and it’s colouring everything.  A lot of people said ‘my aunt and uncle invested all their savings in this because an adviser told them to.  It colours their perception of the industry including you guys in this room.

“People think ‘financial adviser equals financial adviser equals financial adviser’.  They think ‘it must be the people who told my uncle where to put his money.”

And regulation has done little to repair the damage to the reputation of financial advisers, the survey suggests. 

Part of the problem is a lack of awareness: 46% of respondents don’t know anything about the Financial Advisers Act and associated legislation, including 28% of those who use a financial adviser.

Just over two-thirds of respondents (68%) said the legislative changes from 2011 had made no difference to their opinion of advisers, while 9.5% said it made them more inclined to use a financial adviser.
However, some respondents (9%) said the new rules had made them less inclined to use a financial adviser.   Among those not already using an adviser, more people (12.2%) said it had made them less inclined than more inclined (8.4%).

“Some people responded, ‘if they had to be regulated then clearly they are rat bags’,” McInman said.  “That term ‘rat bags’ came up a lot and I was quite surprised because we don’t see that term often.”

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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