Financial advisers will soon be rated by Queensland-based Adviser Ratings in or-der to provide consumers with a guide to financial advisers.
Financial advisers will soon be rated by Queensland-based Adviser Ratings in or-der to provide consumers with a guide to financial advisers.
A panel including industry identities Paul Resnik, Graham Rich, Brett Walker and David Child will provide consumers with a star rating for financial planners based on a detailed questionnaire.
Despite the bright entrance into the adviser industry the system has unsettled Finan-cial Planning Association (FPA) bodies who slated the service as being a “clever commercial enterprise”.
Former FPA chairman Michael McKenna says he is unsure of the impact the new system will have on advisers and the FPA, but says there are problems.
“I’m not sure that the adviser ratings is going to add a lot but there are some prob-lems with some of the methodology being self assessed. There is no customer, cli-ent input,” he says.
“The FPA makes sure our advisers have got qualifications. We have a compliance review which we will be introducing later in the year which will check on people and ethics and rules of professional practise. We keep in touch with the financial industry through complaints scheme.
All the safety valves are in place, but this program doesn’t do this.”
Advisor Investment Services, Wes McMaster says: “If I was still practising, I would not participate. My clients would have the integrity to judge my work. I would not submit myself for assessment by a commercial commentator,” he says.
“It is my view that if advisers across the country decide that it is not in their
interests to support such a system then it will fail, and consumers will
be left with their natural judgements about who they feel comfortable with.
If on the other hand the promoters of this scheme are able to create sufficient anxiety amongst financial planners so that they think they must be part of this rating system, then they just may be successful in convincing the advisory community to support them. It will be interesting to sit back over the next 12 months and see what unfolds.”
The service is to be launched on July 1, and purports to provide “all the informa-tion that is needed to enable the consumer to make a reasonable decision on who to select as their personal financial adviser”.
The questionnaire used to rate advisers is a 15 page document with 400 possible answers. It is partitioned into sections including professional history, continuing professional development, strategic research resources, remuneration service, quality and insurance.
Adviser Ratings chief executive David Child says the service is a “very pro finan-cial planning” and a world first.
“It’s the first in the world. I can’t find anything that comes close. There doesn’t seem to be a central databases on advisers anywhere else,” he says.
Child, who has been part of the financial services industry for more than 20 years has been developing the service for nine months.
He came up with the concept while working at the Australian Investors Association where he found that the most common request he received was: “can you please recommend an adviser”.
“I think the service has the same potential impact as such organisations as Morn-ingstar has on fund managers,” he says.
Child says the key points of the service are that it gives consumers greater confi-dence in financial planners and grows the market.
Participating advisers will answer the questionnaire online via the Web site www.adviserratings.com.au which starts on July 1.
The cost of the questionnaire is $250 plus GST. There is a time limit of 10 working days for advisers to complete the questionnaire otherwise it will be void. The re-turned questionnaire is then automatically processed on computer, with no human intervention for the ratings to be given.
The ratings range from a five star being the highest and three star being considered competent adviser practise.
For those advisers who wish to register for the five star adviser, a $700 plus GST registration fee stands, including 12 months free registration to the service. A four star or three star registering for 12 months will cost advisers $250 plus GST. Once registered the adviser’s information becomes public.
The completed questionnaire is then witnessed by an Adviser Ratings panel.
According to Child, the panel member’s approve the content of the questionnaire. The panel is the authority to change the computerised ratings of the advisers if the need arose.
