Conducting the shadow shop

The first stage of the Australian Securities and Investments Commission’s (ASIC) Shadow Shopping Survey on Superannuation Advice — data collection — was outsourced to Roy Morgan Research.

Data was collected over the seven months between June and December 2005, with Roy Morgan first identifying consumers who met the survey’s criteria to act as shadow shoppers by randomly phoning 19,000 households across Australia.

To qualify, the consumers had to intend to seek, or have recently received professional superannuation advice, and broadly reflect the profile of people in the Australian market for superannuation advice.

Shadow shopping participants were between 18 and 65 years of age and had between $45 and $1 million in superannuation. They were paid $200 to take part in the exercise.

This process identified 1,192 people who met the criteria and were prepared to participate. From this number, 414 completed the survey, resulting in a total of 306 examples of advice that fell within all of the survey’s criteria.

The 306 shadow shoppers selected for themselves what they would seek advice about and where they would go for the advice, with 59 per cent going to an adviser or firm where they already had a relationship and 41 per cent going to a new adviser.

The advisers visited by shadow shoppers included representatives of a wide range of small, medium and large firms.

In the 306 valid samples, advice was provided in 284 cases by representatives of an Australian Financial Services licensee. Two tax agents, two mortgage brokers and 18 unlicensed accountants also gave advice to shadow shoppers on superannuation.

The shadow shoppers completed forms detailing their personal circumstances and kept diaries of the steps involved in seeking advice.

After receiving advice, the shadow shoppers completed questionnaires about their satisfaction with the advice, provided a copy of the written statement of advice (SOA) — if supplied — and any other written material the adviser had given them.

Data collection was completed in early February, and ASIC began analysing the results.

The team that conducted the reviews was experienced in file reviews and superannuation issues, and had experience working in the financial planning industry and as lawyers.

The staff used detailed checklists to standardise the assessments, and negative assessments were double checked by managers.

In cases where there was uncertainty, the financial adviser was given the benefit of the doubt.

The survey’s methodology has been positively received, with supportive comments coming from the Financial Planning Association (FPA), the Investment and Financial Services Association (IFSA) and Labor Senator Nick Sherry to name a few.