Financial adviser ratings agency, Adviser Ratings, has changed its scoring system to reflect the importance of education and professional standards with one-third of advisers expected to have their ratings downgraded.
The new ratings would include an adviser’s incorporate qualifications, relevant association membership, experience, and the volume of consumer reviews in its ratings for Australia’s 19,000 advisers.
One-third of advisers would have their rating downgraded while one quarter would have it upgraded as a result, the firm said.
For example, 13% of Self-Managed Super Fund (SMSF) Association members had inactive memberships and 9% of Financial Planning Association members were not current members. Updating these records would improve an adviser’s rating.
Founder, Angus Woods, said: “Consumers are increasingly demanding transparency from advisers about their education, professional commitments and experience, but it’s still hard to access that information in one place.
“While Australian Securities and Investments Commission’s [ASIC’s] Financial Advisers Register (FAR) lists some professional information, our analysis has shown an alarming number of advisers have out of date listings about their association memberships.”
“The Hayne Royal Commission showed all Australians how important trust is in financial advice, but unfortunately not all advisers are giving consumers an accurate picture of their professional memberships.”
The firm had released a white paper, The Evolution of the Adviser Ratings scoring, to explain the changes.