Nobody should be surprised by research released by major insurer TAL suggesting that people are more inclined to resort to the internet and search engines as a primary source of information for consumers seeking information on financial products.
Financial planners can now join medical practitioners amongst those for whom the internet can be counted as both a blessing and a curse.
Just as doctors have had to confront patients who have self-diagnosed on the basis of search engine results, an increasing number of financial planners will find themselves speaking to clients who have done their own research – and got it wrong.
The difference, of course, is that while a patient who still feels ill might actually feel compelled to take themselves off to their general practitioner in the hope of being properly diagnosed and medicated, those using the internet to make investment decisions may not be capable of being salvaged when things turn pear-shaped.
It is to be hoped that the alacrity with which people pursue investment decisions based on what might be thrown up by Google and Yahoo is not a legacy of the anti-financial planner campaign mounted by the industry superannuation funds and maintained for nearly five years.
Almost certainly, though, the willingness of people to trust their own internet research rather than spending money on a financial planner is probably owed, in part, to the generally bad publicity which has surrounded the planning community as a result of the collapse of Storm Financial, Trio/Astarra and Westpoint.
Indeed, while there was plenty of criticism directed towards planners in the fallout from Trio/Astarra and some of the failed agricultural Managed Investment Schemes, not nearly enough attention was given to the number of investors who were self-directed and the sources of information that underpinned their decisions.
In truth, the internet and search engines represent significant research tools for financial planners and others working in the financial services industry – but very few of them would base their ultimate investment decisions on what those search engines throw up.
Further, planners and other financial services professionals can be expected to have a solid understanding of investment markets and products.
The TAL research, though obviously highly targeted, deserves the attention of the Federal Government as it frames the parameters of the forthcoming “Son of Wallis” Financial Sector Review.
A great deal has changed since the original Wallis Inquiry but, in particular, the influence of the internet as both an investment influencer and a conduit.
TAL chief executive Jim Minto is right to suggest that the internet has empowered Australians and placed them in the driving seat when it comes to their own finances, but he should not overlook the dangers which lie in wait for those who set off without a roadmap.
