Investors' objectives should be central to compensation provided for poor advice provided by unethical planners, an international survey reveals.
Results from the CFA Institute 2015 Global Market Sentiment Survey found that a third of global investment professionals believed that compensation relating to poor advice and unethical adviser behaviour needed to be better aligned with investor objectives.
While one in four Australian advisers believed a "zero-tolerance" policy was essential in tackling the issue of ethical breaches by financial services professionals.
CFA Society of Sydney president, Anthony Serhan, said the Australian financial services industry was at a turning point and stressed that the "crisis of trust" needed to be addressed immediately, with many respondents reporting that a lack of an ethical culture within financial firms was the single biggest factor eroding consumer trust in the sector internationally.
"If we are to earn trust from investors, ethical and literal compliance must be treated as equally important and equally enforceable," Serhan said.
"This means that employers must step up, create a culture of ethical compliance, and enforce it rigorously.
"That isn't to say that the burden falls entirely on employers. Vigilant, proactive regulators are also crucial, but one of the most interesting revelations from this year's survey is that ‘unethical firm culture' is seen as the true culprit when it comes to lack of trust, more so than any failure of government regulation."
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