Compensation needs to be aligned with investor goal: CFA

financial-services-industry/

5 March 2015
| By Nicholas |
image
image image
expand image

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."

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

5 months 1 week ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

5 months 1 week ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

7 months 2 weeks ago

The RBA has handed down its much-anticipated rate decision, following widespread expectations of a close call....

4 days 5 hours ago

The FSCP has issued a written direction to an adviser who charged clients “extraordinary fees” for inappropriate and conflicted advice, as well as encouraged them to swit...

2 weeks 5 days ago

ASIC has cancelled the AFSL of an advice firm associated with Shield and First Guardian collapses, and permanently banned its responsible manager. ...

4 weeks 1 day ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
2
DomaCom DFS Mortgage
95.46 3 y p.a(%)
5