Financial advisers have reacted angrily to continuing attacks on the industry by compensation lawyers who blame financial planners for negative market performance and encourage clients to sue their advisers for supposed poor financial advice.
Industry leaders and dealer groups are accusing lawyers of a shameless bid to gather more clients by blaming financial advisers for market volatility, painting advisers as unethical, and preying on hapless investors.
Chief executive of Western Australia (WA) dealer group Plan B Andrew Black said lawyers who wrote such articles had ulterior self-serving motives.
"It’s quite extraordinary that when the market is going up, none of this is going on, but when the market’s going down, all of a sudden you get all these people saying it’s the fault of the adviser," Black said.
"If you genuinely had a client’s interest at the heart of what you’re doing, that would result in a little more balance around the issue," he added.
Stoking these claims was also counterproductive when only 20 per cent of Australians were getting financial advice, Black said.
An article written by financial services lawyer David Huggins, principal of Huggins Legal in WA, stated "if financial planners tell you that you suffered a loss because the global financial crisis happened, you shouldn’t accept what you are told" and "you have extensive legal rights against your financial planner to recover that loss".
"Quite clearly, articles like this do not help in terms of getting the other four out of five people who would do much better if they were getting the advice," Black said.
A recent Maurice Blackburn press release warned of "rogue advisers … preying on elderly and vulnerable Australians by pressuring them to sign up for financial products without any regard for their clients’ circumstances".
The firm said there were "increasing numbers" of clients contacting the firm because they were locked into high risk, highly geared products, but could not provide a more specific number of approaches than "a few dozen over the past 12 months".
The chief executive of the Financial Planning Association, Mark Rantall, as well as the chief executive of the Association of Financial Advisers, Richard Klipin, blasted compensation lawyers for blaming financial advisers for market volatility and product failures.
"Holding financial planners accountable for the performance of investment markets is totally unreasonable," Rantall said.
Klipin said the Industry Super Network campaign against financial advisers has now moved to the next phase.
Indiscriminately attacking financial advisers through a range of market participants was part of the broader strategy from the ISN, he said.
"In a sense, the future of financial advice is up for grabs and currently under debate – there are lots of players with very specific vested interests that will contribute to the debate without overly disclosing their own vested interests," Klipin said.
"Our strong advice to the ISN is to focus on the positives of their value proposition rather than destroying the confidence of Australian consumers," he said.
Director of Western Australian dealer group Wealth Management Partners Steve Beattie labelled it opportunistic to blame financial advisers for global economic events.
"It undermines investor confidence which is not a good thing from an individual investor’s perspective or from a greater economic perspective," he said.
